Scoping Study / JORC Mineral Resource / Feasibility Studies / Permits, page-2

@Zxc ... answering your post here: https://hotcopper.com.au/posts/41650888/single

Demand for Andromeda’s Halloysite-Kaolin product is in the order of 4 times what they are planning to supply based on LOI’s (around 900 kt pa) they have in hand and production targets in the current scoping study (187kt pa). LOIs are currently a mix of DSO, Dry-processed and Wet-processed product. Their first LOIs were for 208 kt of wet-processed product and it appears from information we have that they are leaning towards supplying a wet-processed product. We will get more information in the Scoping Study. I think Andromeda will have no trouble shifting dry-processed or for that matter some of the DSO customers over to wet-processed product.

No one else is going to be able to come close to supplying this volume and grade and purity of product in the near future. Even if they do it will be at least 5 years away. By that time Andromeda will be the dominant supplier and will be in a very strong competitive position. Market-leader.

A company in deciding mine life needs to balance a number of factors including size of their resource, demand, prospectivity of defining additional resources. Andromeda have prospectivity of additional resources in spades. There’s are some quite promising satellite depoits south of their Carey’s Well deposit, in addition to other exploration targets.

I see satisfying demand as a priority. If they manage to expand resources I would prefer them to favour annual production over mine life. They have promising ground at Poochera, Mt Hope and Camel Lake that they can use for expanding mine life in the future. If it’s a toss-up between 15 years, 20, years, 25, 30 years mine-life etc I would prefer them to target the lower to middle end in mine-life ( 15-25 years ) … just so they can push production to the 250 kt pa range.

From 500kt pa of mining if they increase recovery by say 25% then they would lift annual production from 187 kt to 234kt. Let’s say they lift margin by 20% from reduced shipping and improved OPEX. Then we go from:

187,000 t x $396 = EBITDA $56.8M

233,750 t x $365 = EBITDA $85.3M
(increase of recovery by 25%, increase of margin by 20%)

I’m anticipating a significant improvement in NPV and I’ve posted in another thread that I think they could push IRR to over 200%. Reasoning for increase in IRR and NPV? … well the combination of the following factors that will improve overall project margin - expansion of resources, improvement in recovery, selling a higher-grade product from wet-processing (at a higher price), potentially supplying a subset of product at the upper-end of grade.

The process of drilling, resource upgrades, studies, marketing, approvals they are methodically working through under JM's leadership.

A very unique high-IRR opportunity with reltaively low risk we have unfolding here … why else do we have bots aggressively working the heads and options for accumulating.