For SUV it will all come down to the complexity of the flowsheet required to produce a saleable product. The more impurities, the greater the complexity of processing. That means more components (CAPEX), more inputs (power, reagents, water, other consumables) and greater sustainment costs (maintenance and spares). This all drives OPEX and hence likely margins, subject to pricing that can be achieved.
The below is a typical georgia kaolin flowsheet. As you can see it is complex!
View attachment 2453888For SUV (like any prospective mining operation) it will ultimately be the margins that make the mine, so until there is some clarity on margins it will be high risk. Another risk factor is whether they can produce enough quality product at scale. That means bulk sampling needs to be done and then those bulk samples need to be processed by SUV and then evaluated by potential customers.
In ADN's case initial customer trials had already been done by MEP about a decade ago. That was then repeated by ADN in 2018 with further bulk test work through 2019 and into 2020.
I would say that SUV have at least 2-3 years of testwork and processing trials ahead of them, time required to prove up the resource aside. The potential customers can spend 6-12 months doing testwork once they receive bulk sample so it is not a fast process. Kaolin is a highly technical product with lots of parameters that define quality and suitability for the customer's intended use. Customer specifications will also drive the level of processing required to achieve end customer requirements and that will impact the flowsheet.
Anecdotally there have been a number of potential WA kaolin processors that have tried and failed. Margins need to be robust to be able to compete with the numerous kaolin processors overseas. Lately the shift in WA kaolin has been to HPA because of the more robust margins that can be achieved (but that comes with massive startup CAPEX and complexity).
ADN are in a unique position due to the purity of their resources, the halloysite they have in their deposits and their ability to produce premium blends at high margins. They have a significant degree of optionality in what they can produce - all of them high margin. They also have a low-capex route to strong cashflow due to the purity of their resource.
It took ADN 18 months to produce their scoping study and another 8 months to produce their PFS. So assume 2 to 2.5 years for SUV to get to the point that ADN are at now in terms of progress towards mining.
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