In Episode 186 of Coffee with Samso, Dr Mike Jones, the Managing Director of Impact Minerals Limited (ASX: IPT), educates us on the ins and outs of the HPA business.
The HPA (High Purity Alumina) story for Impact Minerals is now all about the economic process of making HPA. There are no longer any questions on the tonnage or the grade. In simple terms, the company is at the business end of the mineral resource sector.
One of the key aspects of understanding Impact Minerals is to have a clear view of the company's business. Impact is in the business of HPA and what that means is that it needs to deliver High Purity Alumina in the 3N or 4N level (Figure 1).
When considering companies like Impact Minerals, the initial association is often with mineral exploration. However, it is important to view Impact from a fresh perspective. In this episode, Dr. Mike Jones discusses the company's current focus on the Pre-Feasibility Study (PFS) phase, which aims to determine the profitability of the Lake Hope HPA project. This shift in focus highlights Impact's commitment to reaching a stage of financial success, distinguishing it from the negative reputation often associated with mineral exploration companies.
Listen to our coffee conversation with Dr. Mike Jones here:
Samso's Conclusion
Impact Minerals is a company that often goes unnoticed despite its promising projects. Currently, they are actively promoting the Lake Hope project, which has been discussed extensively by Mike during the past two Coffee with Samso sessions. It is evident that the Lake Hope HPA project holds significant value for the company.
It is worth mentioning that Impact Minerals' Broken Hill project was among the six projects worldwide selected for the prestigious BHP Xplor program. On 17th of January 2023, the company issued a release providing further details about their participation in the BHP Xplor program.
BHP Xplor, an accelerator program introduced by BHP in August 2022, is designed to help provide participants with the opportunity to accelerate their growth and the potential to establish a long-term partnership with BHP and its global network of partners.
Impact received up to US$500,000 in cash payments from BHP over the next six months and gained access to a network of internal and external experts to help guide development in the technical, business, and operational aspects of the company.
This means that the management of Impact demonstrated credibility by successfully participating in and gaining acceptance for the Broken Hill project. This is a significant achievement, as only six recipients were chosen for this program, indicating a high level of quality.
While the market trader may perceive Impact Minerals' market capitalisation of 34.37M as high, there is an underlying value that will yield positive results in the future. The Arkun project, which we discussed in a recent episode of Coffee with Samso, is located in a jurisdiction occupied by Tier-1 resource companies like Anglo-American. This provides strong evidence of its prospectivity (Figure 2).
The Lake Hope project is currently in the "Feasibility" stage, and the initial excitement surrounding it has diminished in the market. However, this does not undermine the value that Impact Minerals is creating for its shareholders.
There are two aspects of Impact Minerals that I appreciate. Firstly, the Lake Hope project is undeniably the company's flagship at the moment. Secondly, there is potential for significant growth from the Arkun and Broken Hill projects.
Tune in to Mike's thoughts here.
Chapters:
00:00 Start
00:20 Introduction
01:20 Updates from IPT
02:16 Economical parameters that make an HPA project viable
05:56 All about High Purity Alumina
07:54 The Cost Curve Analysis
11:23 Discussion about entry into the HPA market
12:43 The HPA space after the commodity market softening
14:07 The market for HPA
16:04 The Arkun Project
20:51 The Forward Plan
24:52 Is Lake Hope is still the Perfect Orebody?
25:33 How should investors view Impact?
26:55 Why should investors believe that Impact will deliver the end story?
29:00 With the current interest rate trend, is it a good time for companies like Impact Minerals?
30:55 Why should investors invest in Impact Minerals?
31:48 Conclusion
PODCAST
About Dr Mike Jones
Qualifications: PhD, MAIG
Dr Jones completed undergraduate and post-graduate studies in Mining and Exploration Geology at Imperial College, London. His Ph.D work on gold mineralisation saw him move to Western Australia in 1988 to work for Western Mining Corporation exploring for gold and nickel deposits in the Yilgarn.
From 1994 he consulted to the exploration and mining industry specialising in the integration of geological field mapping and the interpretation of geochemical, geophysical and remotely sensed data for target generation.
Dr Jones has worked on over 80 projects both in greenfields and near mine exploration in a wide variety of mineralised terrains and was the founding director of Lithofire Consulting Geologists in Perth, Australia.
He was also the team leader during the discovery of a significant gold deposit at the Higginsville Mining Centre, near Kalgoorlie and an iron ore deposit near Newman, both in Western Australia.
About Impact Minerals Minerals Limited
Impact Minerals Limited (ASX: IPT) is an exploration company listed on the ASX in November 2006.
The Company manages extensive tenement holdings (>4,000 km2) within Australia featuring significant potential for high-grade mineral deposits of gold, silver, lead, zinc, copper, nickel and PGMs.
The Directors of the Company have extensive experience in mineral exploration and a strong history of exploration success, business development and corporate management.
Impact Minerals intends to build wealth for its shareholders through a vigorous campaign of project generation and evaluation with the aim of building profitable mining operations.
As a well-established company with a strong presence in the industry, Impact's projects, such as the Broken Hill and Arkun projects, are of significant importance and would be considered major endeavors in any other ASX companies. The Broken Hill project, situated just 20km away from the renowned Broken Hill silver-lead-zinc mine in New South Wales, is a Ni-Cu-PGE project (Figure 1 and Figure 2). The geology of this project holds immense potential, making it an attractive prospect for investors and enthusiasts alike. As an observer, I have been closely following Impact Minerals and their projects for quite some time.
Impact has shown that the very high grade palladium and platinum mineralisation at the Red Hill, Platinum Springs and Moorkaie Prospects and the Iron Oxide Copper Gold (IOCG) mineralisation at the Copper Blow Prospect (ASX:SCI) are hosted by and related to alkaline magmatic rocks (Figure 2), (ASX Announcement 13th December 2018).
Figure 2: Location of alkaline magma trends in the Broken Hill area. The Little Broken Hill to Moorkaie Trend contains rocks of potassic ultramafic to alkaline gabbro composition. The Copper Flat to Staurolite Ridge Trend contains rocks of alkaline gabbro to carbonatite composition. An offset of the Copper Blow Trend is interpreted to the south of the Thackeringa Fault Zone. (Source: Impact Minerals Limited)
The Arkun project (Figure 3) which covers about 850 square kilometres is between York and Corrigin, which is approximately 100 km east of Perth. The project was first identified as an area of anomalous nickel-copper-gold anomalies in publicly available regional geochemistry data sets.
What I like about this project is that it is now considered to be in a mobile belt that is prospective for "Julimar" type mineralisation. The discovery of Julimar has now opened up this whole region.
A subsequent interpretation of regional magnetic data by Impact has identified the area as lying within a major deformation zone or mobile belt that trends NW-SE from the Moora-Julimar-Yarawindah area through Arkun and which may contain deformed and metamorphosed equivalents of those rocks.
This belt is generally not recognised in many regional geology maps and yet is self-evident in the magnetic data. This is a significant breakthrough in understanding for Impact Minerals Limited.
The BHP Xplor Program
Impact Minerals has been selected to take part in the prestigious BHP Xplor program, showcasing their exceptional Broken Hill project. This recognition not only highlights the project's outstanding quality but also acknowledges the remarkable efforts and achievements of the company. Considering the rigorous selection process and the multitude of projects submitted, being chosen is a true testament to Impact Minerals' positive impact.
The Lake Hope HPA Project will change the future of Impact Minerals Limited.
The Lake Hope Project covers numerous prospective salt lakes between Hyden and Norseman in southern Western Australia, a Tier One jurisdiction (Figure 4). The project covers about 238 sqkm and are all owned by the vendor, Playa One.
The Lake Hope area has unique climatic and geological characteristics that have resulted in the formation of what is probably a globally unique deposit of aluminium-rich material within the surficial clay layers of two small salt lakes, or “pans”, in the Lake Hope playa system.
The lake clays, which are only up to a few metres thick, have unique chemical and physical properties and consist almost entirely of aluminium-bearing minerals that are plasticine-like in consistency and can be easily sampled with hand-held augers and push tubes (Figure 5).
In addition, particle size distribution analysis demonstrates that virtually all the minerals are less than 16 microns and 60% to 80% occur at grain sizes of less than 5 microns (Figure 6).
These unique characteristics have produced a near-perfect mineral deposit: a very high-value end product whose parent ore is:
Very soft and shallow, allowing for extremely cheap free-digging with limited infrastructure requirements, no pre-stripping, no selective mining, a tiny environmental footprint, and limited rehabilitation requirements.
Naturally fine-grained with no need for crushing and grinding, allowing for transport to an offsite processing facility that can be built on existing industrial sites (Figure 4). In essence, this is Direct Shipping Ore (DSO).
Comprised of a few minerals that require only simple washing before acid leaching, thus allowing for low-cost straightforward metallurgical processing.
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