What does FYI own?The key asset is the Cadoux Kaolin Project...

What does FYI own?

The key asset is the Cadoux Kaolin Project which lies northeast of the city of Perth and southeast of Geraldton port in WA.FYI’s vision is to use the high-quality aluminous clay, or kaolin, from the Cadoux deposit as feedstock for high-purity alumina (HPA) production using its process.The company has argued the clay is a model feedstock and has ideal metallurgical characteristics.FYI’s kaolin is also an inexpensive low-impurity feedstock with certainty of supply and a grade9 of 24.4% aluminium oxide.Cadoux's reserve, prepared by CSA Global and announced in late October 2018, could effectively support a 52-year mine producing 8,000 tonnes a year of HPA.Global HPA demand is expected to increase from about 35,000 tonnes in 2017 to 125,000 tonnes in 2025, driven primarily by strong growth in demand for lithium-ion battery (LIB) separator coating.Electric vehicle (EV) market growth is expected to contribute to HPA demand, with some researchers tipping year-on-year HPA demand growth of about 17%. the company revealed it had achieved a grade recovery of 99.999% purity alumina (5N), an achievement independently analysed and verified by Ultra Trace Pty Ltd in Perth.The company’s flowsheet previously exceeded an HPA target grade of 99.997% purity (4N) during independent metallurgical testing.4N HPA is a high‐value product with broad traditional applications that is increasingly a critical component for the electric vehicle, battery and power storage markets.5N is a subset of the HPA sector and is generally tailor-made to the special requirements of each customer and has smaller market applications.Applications include the LEDs that are used in traffic lights, outdoor displays and high-performance back-lit units.The quality attracts a significant premium over 4N as the applications tend to be complex.FYI’s flowsheet design is based on a standard hydrochloric acid leach and precipitation technology developed in the 1940s.This design has been modified to suit Cadoux feedstock and current HPA market purity requirements.The locked cycle and concentrate test work is expected to provide a basis for possible process improvements to be made to FYI’s process ahead of funded pilot plant studies.FYI hopes to then refine and implement its process during pilot studies and increase confidence in project capital and operating costs, to further build a business case for its project in its BFS.FYI’s September 2018 pre-feasibility study (PFS) valued Cadoux project at US$560 million ($793.5 million) using a net present value (NPV10) calculated at a 10% discount.The corresponding internal rate of return (IRR) was 46% while project payback was a short 3.6 years.Capital costs were US$179 million, or US$22,344 a tonne, while forecasted average operating costs were US$6,467 a tonne, comparing favourably to the US$24,000 a tonne forecasted revenue the company views as realistic.FYI is preparing a BFS for the project, expected in the September 2019 financial quarter.The BFS was formally started in November 2018 and is being led by GR Engineering. It will include a process refined with the latest metallurgical test work.FYI expects to wrap up subsequent pilot study work in late June quarter 2019.The Cadoux BFS is, therefore, now expected in late September quarter 2019.The company had $1.9 million cash on December 31, 2018, and expects $849,000 of cash outflows in March quarter 2019.A $1.1 million advance of 80% of the company’s 2018-19 Australian Government Research & Development (R&D) tax credit will fund the upcoming pilot plant studies in June quarter 2019.