Andromeda Metals Ltd (ASX:ADN) has increased its kaolin inventory in South Australia with an upgraded resource estimate for its Mount Hope Kaolin Project, which represents a 47% increase on the previous non-JORC resource.
The inferred resource is now 18 million tonnes of bright white kaolinised granite, estimated using an ISO Brightness R457 cut-off of 75 for minus 45-micron kaolin product, and this yields 7.5 million tonnes of minus 45-micron quality kaolin product.
New market opportunity
This resource contains two sub-domains consisting of ultra-bright high-purity kaolin (around 1.6 million tonnes of minus 45-micron material with an R457 of 84.1) and high halloysite-kaolin (around 0.6 million tonnes of minus 45-micron material comprised of 17.2% halloysite).
The high-purity domain shows extremely low iron contaminant within the bright white kaolin with halloysite levels ideally suited to some high-value markets in specialist coatings and polymers, which opens a new market opportunity for the company.
The Mount Hope resource is well-sized to supply the market requirements, especially when combined with potentially very significant additional halloysite-kaolin material from the Hammerhead and Tiger prospects at Poochera.
Notably, the remainder of the Mt Hope deposit shows high levels of halloysite (>20%) similar to the existing resource reported at Great White kaolin deposit, which is part of the Great White Kaolin Joint Venture with Minotaur Exploration (ASX:MEP) and in which the company is earning a 75% interest.
This Great White style part of the deposit is perfectly suited for the high-quality porcelain ceramics market.
Mt Hope kaolin mineral resource.
Expected market growth
The company states that, according to Markets and Markets, the paints and coatings market is projected to grow from US$154 billion in 2019 to US$200 billion by 2024, at a CAGR of 5.4% over the forecast period.
Asia-Pacific is the fastest-growing market because the developing countries of APAC, such as China, Japan, India, Indonesia, Malaysia, and the Philippines are focusing on the construction of new residential and commercial buildings, and this is expected to increase in the future.
Premium grade kaolins for the coatings industry are currently sold at US$500–600/tonne.
The global plastics market was valued at US$568.7 billion in 2019 and is poised to expand at a revenue-based CAGR of 3.5% from 2020 to 2027 as plastic consumption increases in the construction, automotive, electrical and electronics industries.
Regulations to decrease gross vehicle weight to improve fuel efficiency and eventually reduce carbon emissions have promoted the use of plastics as a substitute to metals, including aluminium and steel for the manufacturing of automotive components.
Exploration potential
Recent drilling undertaken in March 2020 has determined that the resource remains open to the south and southwest.
The minus 45-micron fractions drill hole MH20AC039 intercepted from 7 metres, 14 metres with an R457 of 85.2 and drill hole MH20AC040 intercepted from 7 metres, 41 metres with an R457 of 81.4.
These two holes separately represent the brightest and thickest intercepts recorded within the Mount Hope kaolin deposit.
The company’s halloysite-kaolin interests.
Future work
Future work to upgrade the resource estimation category will require additional drilling to obtain samples for dry bulk density determinations and reduce the drill hole spacings.
Resource modelling is in progress for the Hammerhead prospect at the Great White Kaolin Project with results expected to be announced in the next few months.
In addition, the company is progressing with the definitive feasibility study and mining lease application process for the Great White project.