Impact Minerals (ASX:IPT) - Scoping Study Cuts High-Purity Alumina Capital Costs

Mike Jones (0:00)

I'm Dr. Mike Jones, the Managing Director of Impact Minerals Ltd. We're listed on the Australian Stock Exchange under code IPT, and we are in the high-purity Aluminum business.

SPEAKER_2 (0:10)

Dr. Jones, how are you? Well, I just want to see, Gene, Gene, right.

Let's talk, when we did speak, I think we talked about the scoping study, which I see has come out. We talked about scaling the Perth pilot plant, and we talked about getting in front of more customers. So how did you do?

Mike Jones (0:30)

We think we've done pretty well, actually, from the scoping study. So it came out on Monday. And to be clear, it's the scoping study for the Alluminous process, the Alluminous pilot plant that we purchased out of administration last year. And that plant uses a solvent extraction process and a chemical feedstock to produce high-purity alumina. And we've been in that space now for about three years. But we purchased the technology because it had a number of very significant advantages that we thought could be brought to fruition. And I think that the scoping study has shown one of the key ones, which is that we have the ability to build plants, commercial-scale plants that are very profitable, that have relatively small outputs. We're talking 2,000 to 4,000 tons of high-purity alumina per year.

And as a result of that, we believe it's incredibly capital-efficient.

And we believe that we can provide top-quality HPA to the market at still a very significant margin. So overall, it's been a great investment from the money that Impact's put into it. And this is really just the first step on our journey to commercialization. And a key step of that commercialization will be in the US. So three of the case studies we looked at in the scoping study were based on the east coast of the US. Where it looks like there's a lot of factors in our favor to set up a first commercial plant there.

SPEAKER_2 (2:02)

Right. And give me some numbers. Because I think when we talked last, you thought it might be 10 million bucks or so. Where have you ended up? And what's changed?

Mike Jones (2:11)

Yeah. So, was that 10 million? I think we were talking about 20, I think it was about 25 Australian. So that number's actually come in. So let's talk about that. Yeah, the numbers. So the most, we've picked a particular case study whereby we have a scale increase in production up to 2,000 tons per annum, and then subsequently add another 2,000 tons production on the back end of that. So the net present value of that project, the 8% discount rate, is currently sitting at about $520 million Australian dollars or $360 million US dollars for a plant of that size.

So that means that, and so I will say for that value, we own 50% of that project, by the way. Impact's total investment has been $2.8 million Australian dollars, and we've created a project list, you know, 50% shares worth about $250 million in terms of NPV. So it's certainly demonstrated that, you know, the financial thing that we saw when we first looked at the project is definitely there. So the numbers are the scale. The big ticket item there is that the capital cost to build that 4,000-ton pranum plant in stages is $75 million US dollars to round it up a little bit.

And so that's an average of about just under $20 million US dollars for about $18 million, $19 million per 1,000 tons of HPA capacity.

And it's worth explaining that because if you look at our competitors who are one in production, AEM and Alpha HPA, who are building a large-scale plant, they're operating at about probably $75 million US dollars per 1,000 tons of capacity. So we've got something here that's about one quarter of the capital cost to be able to build the output of HPA. It's really quite extraordinary.

And the operating cost, because often when you build smaller plants, modular plants, the operating cost goes up. So you don't get the economies of scale. So the operating cost for that plant is just to shade under $9,000 US dollars per ton of HPA. And that's actually on par with both the two companies that I've just mentioned. So here we have a breakthrough technology that looks like we're going to be able to produce at the same cost as anybody else. But what it does, it allows us to have a much better chance of getting over the hurdle that we spoke about before, of getting the capital when you haven't got offtake. There's always a chicken and egg problem in all of industrial minerals, between getting offtake and then being able to get the debt required to build, to supply that offtake agreement. No one wants to give you offtake if you haven't got debt. So our capital threshold, our hurdle to get over is a lot less than anybody else has ever had to do before in the HPA business.