old news update

SWAN RIVER KAOLIN, WESTERN AUSTRALIA

The Swan tenements have high commercial potential due to their very high brightness. They were discovered by Rio Tinto in the 1990's but were not proceeded with as at that time, kaolin prices were lower than today and the high water costs in Western Australia did not provide the favourable economics sought by Rio Tinto.

In the year 2000/2001, MSC Group acquired a number of tenements considered to be most prospective for economic kaolin. Bulk samples of one of these clays were produced in the Skardon River laboratory and were tested by the KCL independent laboratory in Helsinki and with prospective customers involving print and colour trials. The results were superior to established competitor product specification. MSC then engaged in research on finding more efficient methods of using process water which if successful would favourably and significantly impact on production cost.

In 2003 further drilling was undertaken which provided excellent visual brightness kaolin. The deposits are well recognised as having unique superior brightness characteristics which exceed Western European and Brazil product standards. The potential for the Western Australian kaolins is considered very promising for the rapidly growing Asian paper industry. Product yield, however, is very important to project profitability and ACC is taking a cautious detailed assessment of alternative and novel processing methods as well as dramatically improving the product print and gloss parameters by blending into the relatively corse grained West Australian kaolins the engineered fine kaolins from Skardon River. It is envisaged that a kaolin blending facility will be constructed and located to service the principal end users.

Swan River Kaolin was pleased to receive a federal government 'AusIndustry' research and development grant to fund development of the project using our more water efficient processing method. The project milestones were achieved in 2004 and a further grant of A$1.1 million was awarded to assist with the construction of a demonstration plant to prove that similar product specification can be achieved using bulk tonnages of the ore body using our more water efficient kaolin process.

The funding for the demonstration plant is estimated at:

A$'s
Plant cost and service charges 3.0
Less: Grant (1.1)
Net Cost 1.9


The management objective is to establish the viability of the water efficient process and to document this methodology.