Ann: Scoping Study - Port Gregory Garnet Project, page-96

Mid-west garnet is top quality no question. RDG bought Australian Garnet under competitive tension I assume because possibly for the first time in a long time there was another interested party besides GMA. RDG, probably because they are an industrial company at heart, saw the garnet shortage, rebounding global economy, increasing price and demand and moved. Well funded with support by Min Res they have developed the mining lease, added considerable mine life, expansion potential and secured retail distribution deals. Is it mid-west or bust for the garnet market?

Peppie rightly pointed out Mineral Commodities was struggling at Tormin in Sth Africa. The question whether or not GMA was helping MRC out of a bind to stay solvent was answered the next day with announcement of a $10M GMA loan and off-take to get MRC through to the other side of their self-inflicted wounds. I was going to say regardless of the mess MRC got themselves into, with infrastructure and plant in place, the deposit and upside is just too good for someone if not MRC to keep Tormin operating.


Tormin failed first time in moving production to the "Inland Strands" and off the Northern Beaches that have been falling in grade for years. The assemblage is not as high in garnet as the mid-west WA, but it does have significant ilmenite, zircon and anatase credits. The central area on this diagram now has a MRE of 193Mt @ 9.6% with a HG Reserve of 23Mt @ 30% THM within. Recently Tormin got access to the southern tenement and flew areomag, which shows the extension of the inland Western and Eastern strandlines. No doubt similar to the extensions in the north once that lease is granted (mining Reserve literally runs into the central lease boundary).

Let's call it another +30 year mine life. There are substantial garnet stockpiles underneath the GMA stockpiles which will be available for sale once GMA have taken their fill. GMA makes good money out of Tormin's garnet through their processing and extensive global sales network. No wonder GMA bent over backwards to right the Tormin ship, last thing they want is receivership, loss of garnet product and maybe new off-take contracts awarded to others.

In 2018/19 I calculated Tormin was paid apprxox US$100/t (A$142/t) by GMA for 215ktpa of garnet in con. HVY scoping study has cash costs at A$250/t of HMC excluding royalties (US$175/t). I'm sure GMA have cut Tormin a better deal now (not that 2019 was a recession) but why in the world would GMA want to build a $110M new mine (and SS capex is rarely within the 35% accuracy guide) to produce 150kt of garnet for US$175 + royalties when they can buy for the same price or cheaper off Tormin? Even more senseless would be add a HVY buy-out cost to that capex (not included in the HVY opex), making HVY garnet that much more expensive again than buying in another mines bi-product and value adding through their distribution mark-up...

Tormin's not going anywhere, but there are other players coming into the market. South Island NZ is worth keeping an eye on. Westland Mineral Sands has started Stage 1, 100ktpa HMC development near Westport that contains ~20ktpa of almandine garnet. The plan is to lift production up to 500ktpa or 100ktpa of garnet. Another project in Barrytown further down the coast was rejected last year but the locals and government seem to have swung behind it now with the company behind it confident a new application will get up. Barrytown is a much richer deposit than Westland's, where a relatively small 2.6Mtpa mine (same as Tormin) should produce 250ktpa of garnet, 170ktpa of ilmenite, 6.5ktpa zircon and 4kOz of Au... for many years at that mining rate like most other garnet mines. No worries with NZ garnet quality either. Barton International (a huge US abrasives distributor with 140 years experience) had their proposed mine bit further down the coast from Barrytown rejected in 2020 after quite some investment, and Barton wouldn;t have been mucking around on the other side of the world for inferior garnet.

India, Sri Lanka, there are potential garnet mines everywhere, of various qualities to be sure. When BSE will get Toliara up and running they probably won't bother with garnet initially, but sooner or later they will get into the Lower West Unit which has insane amount of garnet. The assemblage looks to have over 1/3 garnet inside cross-sections like this below.


The trouble with garnet as a bi-product like Toliara (and Barrytown) is that the price of garnet really doesn;t matter because you are making bank with everything else. Current DFS has Toliara processing 22Mtpa of 6.1% for avg 1.5Mtpa of HMC LOM. At double the grade that's 3Mtpa of HMC containing 1Mtpa of garnet... ridiculous. My guess is they will look to mine the current lower grade, low garnet deposit mixed with the Lower West Unit deposit to achieve a sensible HMC to the dry plant etc, meaning maybe only 500ktpa of garnet production.

Anyway, all that's some years away and HVY's goal is to get up and running now before the window closes. More production is coming and it will effect the garnet price and equity markets desire to risk their money backing a one-trick garnet pony (don;t mention Hart's Range). All talk on this thread about RDG yet they haven;t even started selling their 160ktpa garnet into the market yet. 160ktpa might not seem like a lot but price is always determined by relatively small imbalances of supply at the margins. 160ktpa added to a market that is coming off a global stimulus boom, supply chain disruptions, inventory restocking cycle that looks like finishing just in time for a global downturn... mmm. My next instalment will look at the supply-demand price drivers of garnet, specifically regards new entrants into a market controlled and profited by upstream distributors...