HPA ASX Comparisons

Quick HPA peer comparison

		PM1	A4N	ATC	FYI
1	Market Cap	10m	170m	74m	11m
2	Source	Al2O3 from DNi process	Unnamed Industrial Feedstock	Kaolin - Meckering	Kaolin – Cadoux
3	OPEX (USD/t)	$3075	$5123	$8550	$6467
4	HPA production (4N)	4007t	10200t	4500t	8000t
5	Selling Price used (USD/t)	25 000	25 000	26 900	24 000
6	CAPEX (USD)	78m	149m	298m	179m
7	IRR (post-tax)	80%	N/A	22%	46%
8	EBITDA USD	88m	200m	76m	128m
9	NPV (post-tax) USD	577m	N/A	505m	506m
10	Other products	Nickel Sulphate Cobalt Sulphate Iron Ore Fines (OPEX doesn’t include credits for other products)	2 Fertilizer Products (Opex includes credits for other products)	None	None
11	Stage completed	Scoping Study	PFS	BFS	PFS

The numbers stack up very well, this shouldn't really be a surprise as we have a much more advanced starting point being aluminium hydroxide already produced from the DNi process. This means lower CAPEX, as less processing is required, and less OPEX as well. Have a look at ATCs proposed flowsheet for an idea of how much is chopped off.



OPEX: considerably lower due to the more advanced starting point. I believe the key difference makers in the HPA space will be CAPEX, OPEX and co-products. The HPA market is currently relatively small and should the space turn into a battle on price the companies with the lowest OPEX will likely come out on top. For my mind OPEX is probably the ultimate comparison as other numbers are skewed by output size. For example ATC numbers are based on 4500t but they have indicated a willingness to increase that rapidly.



These NPV and IRR numbers dont include revenue from PM1s other products. Note A4N did not produce NPV or IRR numbers as they didnt indicate a operation lifetime.

CAPEX - Lowest capex and second lowest capital intensity (A4N has lowest capital intensity) - all the CAPEX numbers are pretty reasonable in a vacuum. However I think co-products will play a significant role in financing.

Co-Products - With the TECH project aiming to produce NiSO4, CoSO4 and Fe there is significant revenue diversification. Note the Scoping Study does not include revenue from the other products. Given the relatively immature market for HPA co-product revenue could be a crucial factor. A4N are projected to have significant revenue from their 2 fertilizer products. I believe the kaolin feedstock producers aim to sell some silica. That will have negligible revenue I believe and have put that as 'none'.

The Players:
A4N have just completed a pilot plant run and have done a PFS. Norman Seckold as chairman has certainly helped them getting their message across. They are pretty coy about the feedstock they are using and the proprietary process. It should be noted that the pilot plant run just completed was the first ever using that process and it hasn't been conducted at commercial scale yet.

ATC: First mover in the space and the most advanced thanks to the foresight of Iggy Tan. Unfortunately for Australia they have decided to do their processing offshore in Malaysia in order to presumably save costs. That said they still have the highest projected OPEX, CAPEX and capital intensity. They will likely get to market first given the head start they had. Have some significant commercial agreements in place currently most notably an off-take with Mitsubishi.

FYI: Have followed the ATC kaolin-to-HPA philosophy. Their lack of revenue diversification could be a major stumbling block in terms of getting financing for a HPA operation off the ground.

PM1: looking to add to their suite of battery products by upgrading Al2O3 to HPA. Low CAPEX, OPEX and great product diversification. Can they deliver a successful pilot plant run for NiSO4, CoSO4 and Fe products? An updated PFS incorporating the effect of HPA will make for interesting reading.