Suvo Strategic Minerals Ltd (ASX:SUV) has wound up the plant upgrade optimisation review on its 100% owned Pittong operation, which kicked off shortly after the company’s executive and board transition in March.
The review validates a roughly 60,000-tonne-per-annum processing capacity of the Pittong plant, compared with a current processing capacity of just over a third of that now.
For the year ended June 30, 2022, total production was in the vicinity of 25,700 dry tonnes, compared to roughly 25,000 dry tonnes for the 2021 financial year.
The production rates for 2021 and 2022 respectively demonstrate the consistency of the plant operations on an annual basis.
Following the findings from the plant upgrade optimisation review, the company has “a high degree of certainty” that a 60,000-tonne-per-annum capacity could be achieved through a combination of equipment upgrades and process optimisation, including round-the-clock operation.
Bottlenecks removed
The company sees the review as a critical work stream, and says its outcomes have provided confidence that all facets of the upgrade were methodically analysed and verified.
The upgrade review took in an appraisal of mining operations and processing infrastructure, with input from specialist engineering groups to identify existing bottlenecks and optimisation opportunities.
Suvo is confident that, in addition to the increase in nameplate capacity, the upgrade, optimisation of equipment and investment in human resources will unlock substantial cost efficiencies.
Measures have also been put in place and activities commenced to ensure that the expanded production team receives sufficient training to operate the plant at the increased capacity.
The numbers
At an expected 83% utilisation, the Pittong operation is estimated to produce some 50,000 tonnes per annum of hydrous kaolin from the end of the third quarter of the 2023 financial year.
The all-in sustaining cost is expected to reduce from A$592 per tonne to A$359 per tonne – a 39% reduction in costs.
Forecast EBITDA is A$8.3 million for the 2024 financial year, and the Pittong maiden mineral resource estimate (MRE) is 5.69 million tonnes of resource, validating a mine life of around 35 years.
Rounding off the positive financials, the company is fully funded to complete the plant upgrade.
Tremendous value
“The completion of the strategic review of the Pittong operations is a major milestone, unlocking tremendous value for Suvo and its shareholders," executive chairman Henk Ludik said.
“By identifying and upgrading vital plant and equipment it has resulted in the opportunity to lift production and reduce operating cost at a modest capex and will translate into a doubling of production and a 4x lift in forecast EBITDA.
“Study work leading to the plant upgrade has enabled the company to validate the growing demand for quality hydrous kaolin globally. Pittong is the only producer of hydrous kaolin in Australia.
“This gives the company great confidence in unlocking other kaolin related markets including Metakaolin applications for emerging opportunities in carbon reducing green cement.
“The company is of the firm opinion that if the Federal Government is to meet its 2030 carbon reduction targets, green cement will be an integral part of the plan to meet those targets.”