Hill End is selling its gold projects to focus on high purity alumina
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Hill End Gold has decided it wants to focus solely on the lucrative high purity alumina (HPA) market and is selling its gold assets.
The decision follows the results of a strategic review conducted by PCF Capital Group.
It also comes close on the heels of robust pre-feasibility results for the Yendon HPA project in Victoria that look better than the numbers released by more advanced rival Altech Chemicals (ASX:ATC) for its HPA project.
“The review included a full assessment of the extensive database on the assets and recommended that there is likely to be strong interest in their sale,” boss Martin McFarlane told investors this morning.
Hill End’s (ASX:HEG) gold projects are located in the historically gold-rich region of Hill End – Hargraves in central New South Wales.
The projects host a gold resource of 571,800 contained ounces.
But Hill End sees more value in its HPA project, with a recently released PFS showing it can produce 8000 tonnes each year that would deliver a 70 per cent margin and annual earnings of $US133 million ($180 million).
HPA is a high-value material needed for lithium-ion battery components and synthetic sapphire used in LED lights, semiconductor wafers and scratch-resistant smartphone glass.
The Yendon project is estimated to have a net present value of $US692 million and an internal rate of return of 34 per cent, with a payback period of 4.1 years.
NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.
Mr McFarlane told Stockhead last week that the metrics were at the “better end” of Hill End’s expectations.
“We think they are very positive and certainly they give us the clear direction for the future to pursue this project,” he said.
PCF will now prepare documentation to facilitate a formal sales process that will begin in early July.
Hill End hopes to strike a sale deal in the third quarter.