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Andromeda Metals adopts diversified product strategy on fast-track to Great White Kaolin Project operations

Published: 15:43 21 Jun 2021 AEST

Andromeda Metals Ltd - Andromeda Metals adopts diversified product strategy on fast-track to Great White Kaolin Project operations
The Great White Kaolin Project covers two main geographic areas of interest in South Australia

Andromeda Metals Ltd (ASX:ADN) is advancing towards starting operations at its Great White Kaolin Project in South Australia and has adopted a diversified product strategy on fast-tracking the project. 

A multi-product strategy is now being pursued with ceramics and coatings and polymers underpinning the ongoing definitive feasibility study (DFS), whilst concrete, high purity alumina (HPA) and other applications provide potential attractive upside over the project life. 

Expansion in a high-class quality product suite confirms the world-class quality of the Great White Kaolin Project joint venture between Andromeda (75%) and Minotaur Exploration Ltd (ASX:MEP). 

This comes after significant binding offtake agreements were executed for Great White’s halloysite-kaolin (CRM) for high-end ceramic manufacturers and ultra-bright, high-purity kaolin (PRM) products for the coatings and polymers markets, while Andromeda continues to make strong progress on the DFS. 

Offtake agreements

Earlier this month, Andromeda, on behalf of the joint venture partners, signed a substantial legally binding offtake agreement with Jiangsu Mineral Sources International Trading Co. Ltd (MSI) for 70,000 tonnes per annum (+/- 10%) of refined PRM product for an initial term of five years at a price fixed for the first three years. 

The joint venture partners consider binding offtake agreement a significantly positive development as it introduces a second product stream, which has the benefit of providing product diversification and therefore assisting to manage offtake market risk.

MSI, an active trading company with a well-established network of suppliers and customers, has indicated that it has longer-term demand for additional quantities of both Great White PRM and CRM, providing added confidence to the joint venture partners.

The company is also in advanced discussions with potential customers in Europe, the Middle East and other parts of Asia for Great White refined halloysite-kaolin product, with samples provided to many of them for testing to ascertain product suitability for their requirements.

DFS forecast for Q4 release

The DFS is well advanced but to date has solely focussed on the production of Great White CRM for the ceramics market but following the binding offtake agreement with MSI for its PRM product,  further work is required to be incorporated into the DFS.

They include:

  • An updated mining schedule to include early mine extraction from the Dorsal Fin area of the Great White Deposit;
  • Adjustments to be made to the existing plant design;
  • Inclusion of a milling and bagging process facility to allow for the delivery of Great White PRM in 25 kilograms bags; and
  • Updated shipping and transportation logistics planning to take into account delivery of bagged Great White PRM in containers as separate to Great White CRM shipped as breakbulk cargo.

As a result of this additional work, the DFS is now forecast to be released in early fourth quarter 2021, though the company is trying to make it sooner.

The joint venture partners are considering an offtake agreement with MSI as a major positive step forward in de-risking the Great White Project, and that incorporating the production of PRM into the DFS is an important development in determining the overall project economics.

Primero Engineering, which has been completing detailed design and costing for the initial 250,000 tonnes per annum feed rate capacity wet-processing plant, has provided preliminary capital costings, which the company has been evaluating for consideration in the DFS.

Mining lease application

The mining lease application for the Great White Kaolin Project, lodged with the South Australian Department for Energy and Mining (DEM) in February 2021, outlines the proposed development of a shallow open pit mine, wet-processing plant and supporting infrastructure, which was in line with the PFS completed in the first half of 2020.

A summary of the submissions made during the public consultation process has now been received from DEM and the company is required to provide a formal response to each of the matters raised.

Forecast timelines for the receipt of the mining lease approval are expected to allow commencement of construction on the Great White Project mid-year 2022 in line with the DFS & bankable feasibility study (BFS) completion.

Concrete applications

The company is progressing the potential use of halloysite-kaolin as a rheology modifier product for the concrete industry with a patent successfully lodged by Andromeda for this application.

Current testing is delivering further improved results with strength testing and rheological benefits, which outperform existing commercial solutions.

Final results will be reported on the completion of the test work and these benefits allow many potential options to reduce concrete costs, lower carbon footprint and improve performance.

A large sample is now being tested by a major concrete supplier across a range of mix designs and has not been completed yet and as such, they are unlikely to incorporation into the DFS.

The company will progress these studies in parallel and announce results separately to Great White DFS results.

Progressing HPA studies

In May, Andromeda signed a Memorandum of Understanding (MoU) with AEM Technologies Inc, part of the Advanced Energy Minerals group (AEM) and has entered an initial 90-day exclusivity period to explore a HPA licencing transaction that includes testing ADN kaolin feed, process feasibility studies and potential licensing and marketing arrangements.

AEM’s Cap Chat HPA Process Plant, in Quebec Canada, uses its patented process to make 99.99% and 99.999% pure high purity alumina and AEM is in off-take discussions with potential customers around the world.

The MoU signed with AEM will see kaolin samples evaluated using the AEM proven process to determine its suitability for HPA manufacture, and potentially lead to the construction by Andromeda of an HPA plant under a licencing agreement with AEM.

The company is progressing its HPA studies, but as with the concrete application studies, the timelines for HPA applications are unlikely to allow incorporation into the DFS.

Great White Kaolin Project

The Great White Kaolin Project covers two main geographic areas of interest, both situated in the western province of South Australia.

The current main area of focus for the Project is on the Eyre Peninsula, which comprises four tenements and is approximately 635 kilometres west by road from Adelaide and 130 kilometres southeast from Ceduna.

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on 31/8/23