Attendedthe recent site and port visit and confirmed to me the major potential upsidefor ADN. I see ADN has the best investment opportunity I have ever seen in my20 or so years of investing on the ASX. Reason for this are:
1: RESOURCE DEMAND ANDGROWTH OPPORTUNITY.
The fact they have aunique resource that is in very hot demand both in traditional uses likeceramics, paints and petrochemical refining but many other uses that the endusers are finding it difficult to get product and want supply asap. ADN'sPoochera resource doesn't just fit the bill of the needs but the high qualitymakes it a significant asset not only in them traditional uses but in high endand new age uses such as potential HPA production plus nanotech with potentialin carbon capture, water purification amongst many others. There is a massivegap in supply and ADN has significant customers wanting supply.
2. MANAGEMENT
1: I have previously metJames Marsh at presentations and Andrew Shearer but on the site visit inattendance was also Nick Harding plus other project staff. When I invest 1 ofthe major things I invest in is people and what I believe are management thatare real deal that both have the strong desire but also the ability to deliverand execute. First and foremost James Marsh our MD has the lot in both theskill set, experience. knowledge and contacts in the halloysite/kaolin industrythrough 30 years experience to execute on this project potential. He also hasthe drive and passion to take this project into not only production but Ibelieve multiple roads through the new age uses such as nanotech. He also isnot a spruiker and I see a guy who just wants to get the job done and is veryexcited by the opportunity to be involved here with his past experience atPoochera where he back then pushed for a halloysite/kaolin blend target ratherthan a focus on bright white kaolin. He explained how past focus was to build a80 mill plant for kaolin production which needed a water desalination plantwhich meant he moved on.. So here and now being back after many years andhaving the opportunity to now focus on the in high demand halloysite/kaolinblend opportunity has him very excited.
The other membersincluding Andrew Shearer, Nick Harding and other project team really had agreat mix with individuals who I believe are more than capable of delivering onproject execution. We had the opportunity to sit down over a meal and beers toreally get to know the team and they gave me the impression of a genuine boardthat have shareholders interests and project execution at the top of the listunlike many management I have met over the years who I believe are there forhigh salaries and lifestyle. Integrity and drive are my major wants in a boardand they fit the bill.
3: ROJECT LOCATION ANDTIME TO PRODUCTION
This is one of the majorreasons I see ADN as the best opportunity I have ever seen on the ASX. ADN's indemand halloysite kaolin resource has the ability to move into productionfaster then I have ever seen with any exploration/mining company I have everseen in the past. For a company capped so low I believe the market still doesnot understand that we have a jorc resource that James marsh believes has a 20year mine life but current drilling will see extend that significantly. I haveseen companies just drilling with no jorc at multiples of ADN's market cap withyears and years to production. ADN has a jorc and is fast tracking toproduction.
The important part of whatI believe the market does not understand that this is farm land with noheritage issues with SA rules having mining as number priority. We have yesfarmers who own land but mining takes preference and ADN have a very goodrelationship with the farm owners who have had exploration take place over manyyears here knowing potentially 1 day a mine may be built. ADN are in talks withthem on moving forward and they see a major opportunity for jobs to be createdin their community. I would like to dispel the rumour that the farmers are nothappy as we are mining 40 metres from their kitchen window. The house is not 40metres away and there is not only distance but a tree line plus the house isdown below a hill drop. I believe key project staff and the board have goodrelationships with the farmers.
Now back to the site visitand we flew out from Adelaide to Wyhalla with a group of board, project staff,holders, brokers and fund managers who were all very interested and excited byboth the project and the team. There was a mix of long term holders who hadbeen invested here for 10 or so years and newer ones. What struck me was thelong termers who had been through a long journey here of up to 10 years werevery excited and stated this is the best they had every felt about ADN and itspotential to project execute and move to production even though in the pastthey had seen major copper drill hits and stock price spikes. But here and nowthey see real opportunity and a board mix that will deliver.
Our first stop was after a1 or so hour drive to Lucky Bay and port that I believe even though it is muchfurther from Poochera has many boxes ticked to be the port of choice for ADN.In end stages of construction with 3 months to finish and with them keen tolock in ADN export they have set up a new port that is a perfect fit. It hasstorage ready set up and environmental permitting for storage of material. Abig plus as with some of the other ports ADN are looking at there would beenvironmental permitting needed to store product at port. Lucky Bay has thepermits in place and storage facility so even though the distance is furtherthe positives are major. Other ports also have no storage facility so ADN wouldburden the cost of that. The difference in truck haulage costs over the furtherdistance they believe would be made more than made up for by reduction in othercosts at closer ports with Lucky Bay also offering good prices in comparison tolock in.
LuckBay port storage
LuckyBay port
We then drove around 3 1/2hours to Poochera to site and the road from port at Lucky Bay to Poochera gaveus the exact route trucks would take from site to port. Roads were good and thearea is a big wheat growing area so roads are used by trucks through wheatexport time so the route is capable of taking truck haulage. We drove onto thefarm land and inspected the site. On site is was plain to see what an easyoperation this will be with James and project staff explaining the shallownature of the resource and how easily a dig up and back fill operation it willbe. We are looking at about 10 metres overburden and 20 metres of resourcebelow. Straight onto trucks to port for DSO or more significantly a dryprocessed plant built on site with sand removed and back filled in as we go.Questions were asked about potential cost of dry processing plant and price ofsale of dry processed ore. James gave rough estimations of price of dryprocessed ore selling for $350>$450 going rate and that a dry processingplant cost we are looking at 2>5 mill for 1st module of input of 500k tonnewith 250k ore produced after sand removal. I ill leave the addition to you guybut I see massive profit numbers for a company capped so low. Questions wereasked of truck haulage and mining costs and shipping costs. My rough estimationis that we are looking at around $30>$40 for haulage and adding mining andshipping costs i say we are looking at dry processed ore looking at a profit ofaround $200 a tonne. These are rough estimations I have come up with and thescoping study will deliver. Dry processing plant costs are low with them beingoff the shelf parts and not specific engineered. James also stated he was incontact with a plant seller looking to sell a whole plant ready made that couldbe shipped over.
We got to see some raw orethat had been left around from drill holes that had been refilled. james showedus some of this ore and bellows picture of him holding some on site just showsthe smile on his face that shows his excitement of what is in the ground outthere and his passion and belief he can deliver this to the numerous customerswho want it.
MDJames Marss with raw halloysite/kaolin ore in hand.
Other questions asked onsite included environmental approval that lays ahead with it being a bigtalking point amongst posters here. it was stated the permitting processstarted in May so we are well ahead and the water testing was also alreadyhappening with them showing us the water testing spots on site. So they doanticipate the environmental clearance should be in by early next year give ortake. The new project manager who came on recently has been working on thatfull steam and has the experience in the area with him working on many in thepast through to approval. The board has put a team in place that is workingwell and has its individual and joint tasks that have experience and knowledgeacross the areas needed.
leaving site we then droveto Streaky bay another port potential site plus pilot plant site and a look atDSO sent over to China for testing plus a sample of ore that had been wetprocessed and then heated at very high temperatures, This type of treated oreis used in high end paints. James spoke of the unfolding potential and workwith Newcastle university in its JV with Minatour Resources. The nanotechpotential is a massive opportunity with product selling for prices of around 5ka kg. Uses are numerous with Newcastle uni working on potential in waterpurification, carbon capture and the adding of it to lithium batteries that seea 5 fold battery capacity. Left field potential also exists in the purehalloysite end with drilling recently to prove up pure halloysite areas withinthe site. This product has a going price of around 5k a tonne and there isdemand with already customers enquiring about the potential for supply.
WetProcessed the high temp heated ore
DSO
In summary the site tripconfirmed to me what an opportunity exists here with the potential for lifechanging gains for this small capped company. Some may think I am overenthusiastic but I see this company as a potential ASX top 200 1 day withserious production numbers and high end tech patents and production innanotech. I suggest anyone with doubts to 1 day make contact with James Marshour MD and have a chat. We have a board I believe and project staff that willexecute here and see ADN in production and at multiples of todays cap. For nowthis is what I can remember from the trip but may add as more comes to me. I amholding tight to this one.
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