Altech Chemicals Ltd (ASX:ATC) has posted a maiden Ore Reserve of 1.2 million tonnes grading 30% alumina for its 100% owned Meckering kaolin deposit located in Western Australia.
The Ore Reserve and mine design will provide immediate kaolin feedstock for an initial 30 years mine-life.
Altech plans to use this kaolin deposit to feed a proposed high purity alumina (HPA) plant in Malaysia.
A bankable feasibility study has been completed for the construction and operation of this plant and the company is currently securing project financing.
Altech aims to begin project development of the plant in Q1, 2017.
Iggy Tan, managing director, commented: “The Ore Reserve statement is a significant milestone that confirms an initial stage-1, 30 year mine-life at Meckering, providing over 1.2 million tonnes of high-quality, alumina-rich kaolin feedstock to supply the proposed HPA plant.
“The next step of the process to bring Meckering into production is the submission of the mining proposal and mine closure plan as part of the approvals required for the commencement of construction in early 2017.”
Meckering
A maiden Ore Reserve is estimated at 1.2 million tonnes at 30% alumina.
The Ore Reserve at Meckering is more than sufficient to support the proposed HPA processing operation for the initial stage 1 mine-life of 30 years.
A Mineral Resource estimated 12.7 million tonnes at 29.5% alumina.
The Mineral Resources estimation at Meckering is potentially sufficient to support its proposed HPA production for over 250 years.
The updated bankable feasibility study on Meckering indicated:
- The kaolin resource can easily meet the processing feed requirements for the production targets of the proposed HPA operation;
- HPA product price of US$23,000 per tonne;
- The 30-year HPA project is profitable, with an estimated NPV before tax of US$357.5 million at a discount rate of 9%, a payback period of 3.7 years and an IRR of 33.3%;
- Project capital expenditure of US$78.7 million and operating costs of US$9,070 per tonne; and
- The cost of the proposed Meckering mining operation accounts for about 2% of the total HPA production cost.
Malaysia HPA plant
Altech is progressing through the detailed design and engineering phase, the final planning phase, for the proposed HPA plant in Malaysia.
Detailed design and engineering activates are expected to continue until the first quarter of 2017.
This will overlap with the expected commencement of construction, which remains subject to the finalisation of project financing.
During August, Altech received a summary of senior facility agreement indicative terms and conditions from German government-owned KfW IPEX-Bank for the proposed US$70 million of debt financing.
Altech and KfW IPEX-Bank commenced detailed discussions and negotiations of the proposed facility agreement terms and conditions, which are not binding on either party yet.
Analysis
The maiden Ore Reserve at Meckering represents another milestone for Altech as it looks to become one of the world's leading suppliers of 99.99% HPA.
HPA is a high-value, high margin and highly demanded product as it is the critical ingredient required for the production of artificial sapphire.
Altech was granted its mining lease at Meckering, where it is planning to mine 120,000 tonnes of kaolin every three years on a campaign basis, each mining campaign will last two months.
Updates on project financing for the proposed Malaysian HPA plant remains a key catalyst for the company.