Impact reckons it could be the world’s lowest-cost HPA producer
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Special Report: Scoping study reveals Impact Minerals could be the world’s lowest-cost producer of HPA via its Lake Hope project in Western Australia
As far as Impact Minerals (ASX: IPT) can ascertain from published data, Lake Hope could be one of, if not the lowest-cost producer of High Purity Alumina (HPA) globally, possibly by a significant margin of up to 50%.
The Lake Hope scoping study estimated an operating cost of US$3,264/t (net of by-product) to produce 10,000tpa 4N HPA over an initial 25-year mine life.
Impact believes the “unique nature” of the clay-hosted Lake Hope project, about 500km southeast of Perth, allows for very cost-effective mining and processing. Advantageous attributes include deposit size, zero strip ratio, high-grade mineralisation at surface, no on-site beneficiation and the kinetics of the metallurgical process.
Lake Hope’s forecast operating costs compared favourably with those reported by other ASX-listed HPA hopefuls Alpha HPA (ASX: A4N) and FYI Resources (ASX: FYI) in March 2020 and April 2021 respectively. Impact noted A4N’s US$5,940/t and FYI’s US$6,217/t have not been adjusted for ongoing inflation costs since publication.
Impact’s scoping study is based on work completed by Playa One prior to the company’s acquisition of a right to earn 80% of the Lake Hope project in March. That milestone can be achieved upon completion of a PFS.
The metallurgical process models assumed in the scoping study are also similar to current and proposed HPA operations. Impact also based the study on “realistic and achievable” assumptions.
Initial capex for the 10,000tpa operation at Lake Hope is estimated at $253 million. Other key financial metrics include post-tax NPV of $1.334 billion, IRR of 55% and annual cashflow of $174 million.
Steady-state production of 10,000tpa is achieved following a two-year ramp-up period.
The scoping study is also based on a conservative HPA price of US$22,000/t, compared to many recent forecasts of more than US$25,000/t from 2025 onwards. The forecast compound annual growth rate for HPA and related products over the next decade is about 20% and largely being driven by expansion in the battery and LED sectors.
HPA is deemed a “critical mineral” in Australia and many other countries.
Impact managing director Dr Mike Jones said the scoping study demonstrated the “world-class potential” the company saw in Lake Hope when it first came across the project.
“If you are playing in the industrial minerals space, at least one of four things has to be true about your mine or you will not make it through the market cycle: the deposit has to be either the biggest, have the highest grade, be first to market or, preferably, be the lowest-cost producer,” he said.
“The unique characteristics of the Lake Hope deposit, both in terms of mining and processing, look like they could deliver HPA at the lowest cost globally by a significant margin.
“The ability to deliver sub-US$4,000/t HPA is an extraordinary competitive advantage that Impact will continue to leverage in the current PFS, due for completion in 2024.”
This article was developed in collaboration with Impact Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.