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Explorer Andromeda Metals wants to explore an area in South Australia where historic exploration identified 12 million tonnes of kaolin – a clay mineral used to make high purity alumina.

High Purity Alumina (or “HPA”) is a base material for making lithium ion battery components, LED lights, electronic displays (including smart phone glass) and surgical tools – and demand is growing.

Andromeda (ASX:ADN) applied for an exploration licence over the 227 sq km Mt Hope area, about 80km from Port Lincoln in South Australia.

Previous explorers were targeting paper grade kaolin, but the area has large amounts of halloysite kaolin instead – which is unsuitable for paper applications.

Halloysite is a rare type of kaolin that has wide variety of industrial uses and can be upgraded to HPA.

The market price for halloysite kaolin is now growing due to closure of large production facilities in China by government environmental authorities, Andromeda said.

The Andromeda (ASX:ADN) share price over the past year.
The Andromeda (ASX:ADN) share price over the past year.

Old technical work showed existence of high value kaolin material, equivalent to Andromeda’s Careys Well deposit at its flagship Poochera project – also in South Australia.

Chinese manufacturers have already signed letters of intent to buy more than 200,000 tonnes of product from Carey’s Well, if it reaches production.

The company said the historic resource estimate and all related analysis for Mt Hope did not meet reporting standards, and would have to be confirmed by further exploration and testing.

Andromeda had just over $1.7 million in the bank at the end of September. Its share price, which has traded between 0.5c and 1.3c over the past year, is trading at .7c.