Andromeda Metals Ltd (ASX:ADN) has gained confidence that the Great White Kaolin Project (GWKP) will be a global contributor of high-grade kaolin with the completion of a robust definitive feasibility study (DFS) and an updated ore reserve.
Andromeda says the DFS demonstrated high margin cashflows with a pre-tax net present value (NPV) of A$613 million and an internal rate of return of 36%.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) is expected to be about A$2.283 billion, with a life-of-mine (LOM) of 28 years, averaging out to an annual EBITDA of A$81.5 million.
Great White’s ore reserve now sits at 15.1 million tonnes, within a mineral resource estimate of 34.6 million tonnes.
DFS advances Andromeda’s vision
“The DFS confirms the project as a globally significant supplier of high-value kaolin to international ceramic, paint and other specialised markets,” Andromeda Metals managing director James Marsh said.
“The completion of this stage in the development of the GWKP further advances Andromeda as a fast-growing South Australian company with a vision to lead the world in the sustainable supply of superior quality industrial minerals and advancement of nanotechnologies.”
Andromeda has planned development of the deposit to take place in four stages with an initial capital expenditure of A$93.8 million. The company expects to achieve first production within an 18-month period once design and construction begins.
All capital expenditure after the first stage is intended to be funded by cash flows from the project, with an expected pay-back period of 5.9 years, based on achieving 600,000 tonnes of ore per annum throughput by stage three.
Next steps
Andromeda will now progress secondary approvals and detailed design. The company expects products from the project will be high-quality and plans to use conventional mining and processing.
Over the next six months, Andromeda will focus on marketing, securing further binding offtake agreements and financing.
The company will likely order long-lead items and begin mining preparation works once secondary approvals have been received.
ADN intends to continue to optimise the DFS during the next stage of detailed engineering and the development of final works packages.
About Andromeda Metals
Andromeda Metals is an emerging industrial minerals company based in Adelaide, South Australia, with a vision of becoming the world’s leading supplier of high-grade halloysite-kaolin.
The development of the Great White Kaolin Deposit remains the focus for Andromeda, with the Mount Hope Project offering potential for future growth opportunities for the company.