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FYI Resources moves to DFS finalisation after successful HPA pilot plant studies

Snapshot

The company has moved to finalising a feasibility study for its High Purity Alumina Project this quarter.

FYI Resources Ltd - FYI Resources moves to DFS finalisation after successful HPA pilot plant studies

Quick facts: FYI Resources Ltd

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ASX:FYI
Market: ASX
Market Cap: $12.77 m
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  • The Western Australian company spent $1 million in the September 2019 financial quarter, collecting a $250,000 R&D payment last quarter for its now-completed pilot plant studies. 
  • FYI Resources collected a further $750,000 R&D tax rebate this month and finished its pilot plant trial a fortnight ago.  
  • The company is advancing a DFS for its flagship high-purity alumina project after securing project support from the WA Government last quarter.  

Pilot plant data will ... provide critical inputs for our definitive feasibility study.

FYI Resources managing director Roland Hill

FYI Resources Ltd (ASX:FYI) (FRA:SDL) received top-level support for its Cadoux High Purity Alumina (HPA, Al2O3) Project from the Western Australian Government in the September 2019 quarter as it progressed a 2019 definitive feasibility study (DFS) for the project. 

The Western Australian company, which released its September 2019 quarterly results yesterday, had a number of achievements last quarter. 

These included the WA Department of Jobs, Tourism, Science and Innovation (DJTSI) being appointed lead support agency for the project given state importance by its Premier Mark McGowan. 

DJTSI is charged with delivering the state’s Future Battery Industry Strategy.

Pilot plant trial

Another milestone at the project was the completion of a pilot plant trial on October 9, 2019.  

FYI Resources managing director Roland Hill said, “Successful commissioning of the pilot plant during the quarter is a significant step toward further validation of the company’s HPA strategy. 

“This led into trial production which commenced shortly after the quarter-end. 

“The results from these trials will be vital in verifying FYI’s process flowsheet. The pilot plant data will also provide critical inputs for our definitive feasibility study.” 

FYI has a granted mining lease, M70/1388, for the ore reserve at Cadoux Kaolin Project. 

The company views the WA Government approval as a major step that will allow it to progress activities on-site at the project northeast of Perth and southeast of Geraldton port. 

FYI sees the project milestone as necessary to marking Cadoux’s journey through further phases of development. 

Established economics

The company has been working towards producing a definitive feasibility study (DFS) for the Cadoux project this year after publishing a pre-feasibilty study (PFS) last year.

Cadoux project was valued at US$560 million ($793.5 million) in FYI Resources’ September 2018 study, using a net present value (NPV10) calculated at a 10% discount.

The corresponding internal rate of return (IRR) in the PFS was 46% while project payback was a short 3.6 years.

Capital expenditure (capex) costs were US$179 million (A$261.35 million), or US$22,344 (A$32,634.93) a tonne, while forecasted average operating costs (opex) were US$6,467 a tonne, comparing favourably to the US$24,000 a tonne of forecasted revenue the company viewed as realistic.

A CSA Global reserve for Cadoux project, announced in October 2018, indicated it could support a 52-year mining operation producing 8,000 tonnes a year of HPA.

Global HPA demand is expected to increase from about 35,000 tonnes in 2017 to 125,000 tonnes in 2025, driven primarily by strong growth in demand for lithium-ion battery (LIB) separator coating.

Electric vehicle (EV) market growth is expected to contribute to HPA demand, with some researchers tipping year-on-year HPA demand growth of about 17%.

‘Consistent’ 4N product grade

Cottesloe-based FYI Resources achieved 99.997% to 99.998% Al2O3 in its latest pilot studies, exceeding a four-nines (4N) targeted grade of 99.99% Al2O3.

5N gradings (99.999%) have been previously achieved from the company’s process.

FYI reported yesterday, “The assay results indicate that a consistent product grade can be achieved with variable feed inputs into the process.

“In addition, the range of impurities detected was minimal with only 10 impurity elements being detected via GDMS.

“Most significant were the very low sodium and iron levels, which is a key requirement for potential customers.

“The results from the VC test work demonstrated sound process chemistry and kinetics of the innovative process design which support FYI’s broader HPA development strategy in terms of achieving low project capex and opex.”

Quarterly financials

FYI Resources spent $1 million in the September 2019 quarter after collecting a second $250,000 sum in the quarter in anticipation of an Australian Government research and development tax rebate.

The Innovative Technology Funding Pty Ltd (ITF) forward-payment for pilot plant and trial production was extended as part of a $1.1 million funding facility consisting of 80% of anticipated 2019 R&D tax rebates.

FYI plans to spend $270,000 in the December 2019 quarter, including $120,000 on exploration and evaluation.

Key inflection points for the December 2019 quarter include:

  • Receiving pilot plant analysis back from EAG laboratories in the US.
  • Forwarding HPA trial product to targeted end-user groups for product qualification and assessment.
  • Advancing project capital funding discussions with financiers, potential clients and offtake parties.
  • Completing the company’s HPA definitive feasibility study.
  • Continued project development at Cadoux and Kwinana.

Cash burn ‘reduced significantly’

FYI Resources ended September 2019 with $147,000 and went on to receive a $750,000 R&D tax rebate after the end of the quarter.

The company had $552,000 remaining on its ITF facility at the end of the September 2019 quarter and said yesterday the renewed facility now sat at $750,000.

FYI said this week, “With the major cost projects such as the pilot plant and the locked cycle test work completed and metallurgical research and development largely accomplished, the company’s previously high cash burn has been reduced significantly.”

Its Welshpool pilot plant near Perth Airport ran 24 hours a day for 7 days from October 2, 2019, to show off end-to-end processing using its flowsheet.

The HPA product it produced will be analysed for quality and grade before it is sent on to end-user and industry groups and used in product marketing and offtake discussions.

A video of the pilot plant in operation is available at the company’s website, fyiresources.com.au.

FYI Resources will hold its annual general meeting at HLB Mann Judd at 130 Stirling Street, Perth at 12.15pm Western Standard time (3.15pm AEDST) on November 29, 2019.

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FYI Resources commissioning high purity alumina pilot plant

FYI Resources Limited (ASX:FYI) managing director Roland Hill updates Proactive Investors on the commissioning of the high purity alumina (HPA) pilot plant at Kewdale, Western Australia. Hills says the plant is crucial in the development of the Cadoux Kaolin Project and he is happy with...

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