Astron to spin-out processing, focus on minerals sands

While it was undoubtably a decision that was made after much deliberation, Astron Corporation’s (ASX:ATR) move to demerge its downstream processing and sales business to focus on its mineral sands assets seems particularly well-timed.

After all, it comes just days after Rio Tinto (ASX:RIO) declared force majeure on customer contracts at Richards Bay Minerals (RBM) in South Africa due to safety and security concerns.

This is expected to create a shortage in the high-grade titanium feedstock in an already tight market.

That existing tightness is the more likely to be the reason that Astron is now seeking shareholder approval to demerge its China-based downstream mineral processing operations into a separate non-listed entity, Titanium Hong Kong.

It expects to achieve this demerger by way of an in-specie distribution of shares in Titanium Hong Kong to existing Astron shareholders.

Astron will retain its Donald project in Victoria and the Niafarang project in Senegal.

Chairman Gerald King said that following a strategic review, the company’s board believes that the most appropriate structure for the company is to separate its upstream mineral assets from its downstream processing and trading operations.

The company still expects to benefit from Titanium Hong Kong’s long operating history in Asia, existing connections and its extensive intellectual property, through arrangements for access to IP and know-how relevant to the commercialisation of Donald.

Mineral sands commercialisation

This plan is a key step for the company to progress its commercialisation plans for the Donald mineral sands project that is expected to be a significant new source of zircon, titania and rare earth elements.

Donald has existing proved and probable ore reserves of 602 million tonnes grading 4.8% heavy minerals within a significantly larger resource of 5.7 billion tonnes at 3.2%HM.

Recent metallurgical test work has confirmed the recovery of a high-quality zircon product with low impurities, up to 94.4% recovery of titania (titanium dioxide) and the production of a high quality rare earth elements concentrate.

This provides confidence in the selected mineral separation process and the potential for commercial scale recovery.

“If this project proceeds as planned by the company, it will represent Astron’s first, major upstream mining, concentrating and processing operation, producing mineral sands products of zircon and titania, as well as rare earth elements,” King added.

Astron Corporation (ASX:ATR) share price chart