Encouraged by anticipated sales volumes for kaolin products from The Great White Project (TGWP) Andromeda Metals Ltd (ASX:ADN, OTC:ANDMF) will expand production in the initial stage to 90,000 tonnes per annum from the originally planned 50,000 tonnes.
Binding agreements already in place for TWGP’s kaolin products exceed the planned Stage 1A+ production level as contemplated in the 2023 definitive feasibility study (DFS) for the South Australian project.
With the company expecting binding volumes to be increased through the conversion of volumes under its existing Heads of Agreement (HOA), negotiations for which have now reached an advanced stage, the expansion plans have been brought forward.
“Significant step”
Andromeda’s CEO and managing director Bob Katsiouleris said: “The decision to increase the scale of our planned Stage1A+ operation is a significant step forward in Andromeda’s commercial strategy, which greatly improves capital efficiency and financial outcomes, and support the ongoing discussions with the numerous debt providers currently underway.”
The staged expansion of the project will now reach cumulative nominal annual kaolin production of 90,000 tonnes (100,000 wet metric tonnes or wmt) in Stage 1A+ within 17 months of final investment decision (FID).
This has also seen Andromeda reschedule subsequent stages of the 2023 DFS, such that the expansion to TGWP’s ultimate 300,000 tonnes per annum will now proceed as follows:
Offtake progress
This decision follows the progress made in negotiations with current and potential offtake partners, including Traxys, and Andromeda now anticipates total volumes committed under binding offtake agreements to surpass nominal Stage 1A capacity from Year 1 and reach 100,000 wmt of kaolin in Year 3.
TGWP production and offtake profile.
These volumes include anticipated commitments for Great White CRM™ and Great White KCM™, which target the high-value ceramic tile/countertop and porcelain tableware markets.
Volume commitments for Great White HRM™ have been excluded and, subject to end-user testing, will support future expansion opportunities.
All material assumptions used in the 2023 DFS5 continue to apply and have not materially changed.
Forecasts are based on TGWP 2022 ore reserve estimate.
Enhanced economics
The 2023 DFS put forward a pre-tax NPV (8) of $1.01 billion for the TGWP but this has increased by A$64 million to $1.074 billion due to the revenues brought forward by the re-scheduling of the expansion stages.
In re-staging TGWP, Andromeda has assessed the economic impact of each stage of development, as summarised below.
The results of this analysis are shown on a pre and post-tax basis. All material assumptions used in the 2023 DFS7 continue to apply and have not materially changed.
Pre-tax NPV (8) (real) of each stage of TGWP.
Post-tax NPV (8) (real) of each stage of TGWP.