Earlier today in another thread I wrote that I think there's a chance the second train of production (115ktpa wet processed filter cake) would be used for a different application (paints/polymers/coatings) because I thought there's enough time for ADN to secure these customers and sign off-take but upon revision of my notes and talking to friends I've concluded otherwise and a large part of that is because...
1) Why rush to secure a different clientele base when you can perfect one market first 2) Management are running the PFS for the above application separate to the DFS of this project 3) Don't have to share the profits of Mt Hope with MEP
FWIW I still think they will service that application from the dorsal fin area of the GW project in the not too distant future. The restarting of the Streaky Bay pilot plant is positive also, one would think.
Mount Hope drilling assays are due shortly and take nowhere near as much time as halloysite analysis so I anticipate these in the next two to three weeks.
This matters because, obviously, they can begin to define a resource > upgrade confidence intervals > determine project viability > progress succession of studies and begin to move this project along so it comes online hopefully mid to late 2023. Given that most of it should be a copy+paste job from GW I see timelines being at the mercy (at least for the most part) to things outside of the companies control (independent experts, studies, council, approval processes etc).
With Mt Hope being a real tangible concurrent project to GW I think it's worth discussing the area a bit.
GW transport and shipping costs are $103/t concentrate which makes up 37% of the ASIC and this was in part DSO product (toll refining not included). I expect the DFS to clear up which port they are going to ship to but it definitely will not be close to the port options that Mt Hope may have. I anticipate they will keep it on the western side of the cape with Mt Hope having options on the eastern side.
A bit of context / info on the Mt Hope market prior to discussing the area and options a bit.
There has been a lot of trash on these threads recently about market data / forecasts / analysts so this should help clear it up first and foremost.
As to why I think Mt Hope will massively value accreditive to ADN is because...
1) They can leverage all experience from GW to their advantage 2) As above, premium grade kaolins for the coatings industry are sold at $US500-600t and we know Mt Hope is literally off-scale, world class product. 3) Shipping / transport costs (which, as above, make up a significant part of the AISC) can be reduced with thanks to the South Australian government putting in some handy near by ports.
Revisiting this article from 14 Aug 2020 details a new Port Spencer deep water port.
More info dated 14 December 2020 in which the port opens up from grain-only to multi-commodity, mutli-user port which should time well with the opening of Mt Hope.
Say we take GW as example and use 500ktpa throughput for a wet-processing facility. Let's keep the kaolinite quantity the same for simplicity and arguments sake and leave it at ~46% (50% for today's back-of-napkin run through) and say they can produce 250ktpa of processed filtered cake product (subject to infrastructure and all normal operational risks) with a reduced AISC namely due to transport, a better selling price and subsequently higher overall margin, at 100% ownership I don't think it's unrealistic that we could have upside in the 10's of % better than that of GW's ultimate DFS numbers.
Will obviously have to run these properly when the DFS comes out and we can get a better idea of shipping costs but I think Mt Hope is one to keep an eye on and the massive infrastructure projects the SA gov is developing is going to benefit us materially.
ADN Price at posting:
41.0¢ Sentiment: Buy Disclosure: Held
(20min delay)