Has Impact Minerals hit the big time?

“We set Impact up to find a world-class orebody.”

It’s an origin story Dr Mike Jones, long-time Managing Director of Impact Minerals (ASX:IPT), acknowledges is as obvious as it is challenging. 

“While everyone might start off like that, the problem is that those true world-class orebodies are few and far between.”

Few and far between, indeed, but not a total fantasy. When Jones thinks of “world-class” discoveries in recent years, it’s De Grey’s (ASX:DEG) Hemi, Chalice’s (ASX:CHN) Gonneville, and Azure’s (ASX:AZS) Andover deposits which offer inspiration.

It’s these companies which “basically got to billion-dollar market caps and they hadn’t even turned a sod of earth,” Jones says.

“One big discovery and boom, you’re kind of home and hosed. But they’re very rare and they don’t come along very often. That’s one of the reasons Impact has been around so long — we haven’t had that bit of luck required to find that world-class orebody.”

Until now, that is.

The ‘Magic Lake’

Impact Minerals holds an extensive suite of exploration projects dotted all over Australia, chief among which is the Lake Hope High Purity Alumina (HPA) Project, located 500km east of Perth in Western Australia.

Spanning 238km-square, the project consists of 6 granted exploration licences which cover a number of small salt lakes between the towns of Hyden and Norseman. All tenements are currently 100% owned by private explorer Playa One Pty Ltd, although Impact will be eligible to acquire an 80% stake in the company — and subsequently 80% of Lake Hope — upon completing a Prefeasibility Study (PFS).

Two lakes — dubbed East and West — are of particular interest for the high-grade alumina clay minerals they host, which in turn offer a mishmash of efficiencies and conveniences the folks at Impact are only too happy to enjoy.

“All the action is in the top 2m of these two small salt lakes, basically. There’s a unique mix of minerals in those lakes, and they’re naturally extremely fine grained — nanometre-sized particles, mostly — which allows for some incredible advantages in mining and processing,” Jones explains. 

“All the action is in the top 2m of these two small salt lakes, basically

“That’s really the secret to the ‘Magic Lake’, as we call it. And the end result of that — which came out in the Scoping Study — is that we believe that we can be one of, if not the world’s lowest-cost producer of HPA, which is a high-margin and high-demand niche business.”

A maiden resource estimate for the Lake Hope Project, published in June 2023, outlined a 3.5-million-tonne deposit measuring 25.1% aluminium oxide (Al2O3), representing 880,000 tonnes of contained Al2O3 — 88% of which, or 775,000 tonnes, sits within the indicated category.

Completion of the resource estimate allowed Impact to publish a Scoping Study in November the same year, which estimated a net present value (NPV) for Lake Hope of more than $1.3 billion. Following an initial capital cost of $253 million, the project is — after a two-year ramp-up period — expected to annually produce 10,000 tonnes of 4N-grade HPA for 25 years, generating around $174 million in post-tax cash flow each year.

But as Jones noted, it’s the low operating costs and high margins that are most compelling. The size and type of deposit at Lake Hope — combined with the high-grade mineralisation at surface, zero strip ratio, and no need for on-site beneficiation — means Impact can produce a tonne of HPA for less than US$4,000 and sell it for between US$15,000 and $25,000.

By comparison, Alpha HPA (ASX:A4N) estimated in a March 2020 study for its HPA First Project that it would be able to produce HPA for US$5,940 per tonne, net of by-product costs. In April 2021, Cadoux (ASX:CCM), formerly FYI Resources, flagged a cost of US$6,661 per tonne at its HPA Project.

“One of the issues we have is that people kind of don’t believe it,” Jones says.

“That’s really one of the things about it being a world-class orebody — people don’t really understand, they can’t believe how good the economics can potentially be on this project.”

The importance of sideways thinking

How Impact came to be involved with the Lake Hope Project is just as fascinating.

“We actually came across the project in an unbelievable way as well, because we actually found it on LinkedIn. That’s where our world-class discovery was made,” Jones says.

He credits a man by the name of Roland Gotthard — the current owner of Lake Hope, along with several other Playa One shareholders — for the actual discovery of the lakes. According to Jones, Gotthard had realised that many people trying to produce HPA out of various alumina minerals, particularly kaolin, were using a hydrochloric acid leaching process, and taking a long time to generate consistent results. 

In a spurt of sideways thinking, Gotthard went at things backwards, and considered which minerals would deliver alumina using a cheaper leach reagent like sulphuric acid.

“He got some material, designed a process that worked basically on his kitchen benchtop, and then went out and found the deposit. Normally you find a deposit and then work out how you’re going to do the processing. But Roland’s real insight was to do it the other way around,” Jones explains.

“He identified these two lakes in a particular corner of Western Australia where the climatic conditions are perfect to create this mix of minerals that we have there. These two lakes seem to be very special in the sense that they’re almost exclusively these minerals, whereas a lot of the others in the area have the minerals but they’re mixed in with other stuff that just makes it harder to process.”

The method Gotthard designed is known as the ‘Playa One Sulphate Process’. However, in an announcement at the end of February this year, Impact said it had devised a new low-temperature leach method capable of producing 99.99% pure HPA, known as the ‘LTL Process’.

The LTL Process removes the requirement for sulphuric acid — a key part of the Playa One Sulphate Process — and reduces the number of processing steps from 5 to 4, which Impact said could offer further cost reductions compared to the Playa One Sulphate Process that formed the basis of the Lake Hope Scoping Study in November.

“The energy requirement comes down, the capital expenditure comes down, and the number of pieces — literally the number of pieces of gear you need — is also significantly reduced,” Jones says. 

“Without wanting to be too confident in the marketplace, the LTL Process is looking like the go at the moment.”

Though Impact now has two processing avenues, both will continue to undergo optimisation activities — a decision Jones says will provide the coming PFS with greater flexibility.

“For example, we were going to buy our sulfuric acid, that was in the Scoping Study. But we’ve now discovered that for marginal extra capex, we could actually produce our own sulfuric acid,” Jones adds.

“Sulfuric acid plants generate a lot of heat and they generally use that energy to power the rest of the plant. So we discovered, post-Scoping Study, that there could be significant cost savings by reducing the energy by making our own sulfuric acid. It’s not a story we’ve told, but that’s why we’re still running with the sulphate process, because we’re trying to optimise all of these things. It’s like a whole lot of balls in the air, and we need to make the right strategic choice.”

A matter of focus

With so many balls in the air, Jones admits there is a certain need to narrow Impact’s focus. 

In addition to Lake Hope, the company owns the Broken Hill and Commonwealth projects in NSW, the Doonia, Dalgaranga and Narryer projects in WA, and a package of regional assets — Martup, Dinninup and Mineral Hill — in south-west WA. All will be divested to provide Impact with the resources and funding necessary to advance Lake Hope and the one other project the company plans to retain, the Arkun-Beau-Jumbo Project in WA.

In early January, Impact announced the discovery of a “very significant” rare earth anomaly at Arkun’s Hyperion prospect, based on earlier soil sampling activities which identified anomalism covering at least 3km-square and measuring up to 5,880 parts per million (ppm) total rare earth oxides and yttrium (TREO+Y).

In its announcement, Impact said the new anomalies add to a larger 10km-long anomaly previously found at the Horseshoe prospect some 25km to the east, while another TREO+Y anomaly has been discovered at the Swordfish prospect, 10km south-east of Hyperion.

A separate announcement later the same month heralded a major copper soil anomaly at Arkun’s Caligula prospect, which Impact said at the time is testament to “the significant exploration potential for a range of battery and strategic metals at the Arkun Project.”

“Rare earths and copper are the two dominant things there. We do have some gold anomalies, there are some lithium anomalies, but I think those are a bit of a furphy. Nobody’s really found any significant lithium yet out in the wheatbelt. We might be the first, but we’re not making a big deal of it,” Jones says.

“But Arkun is a very grassroots project with many geochemical anomalies. We’ve done two airborne geophysical surveys and lots of geochemistry. We’re still collecting samples now, so it’s a very active project.”

For that work to continue, however, Impact needs to continue its pursuit of what Jones calls “a rationalisation of its portfolio.” Already, the company has trimmed non-essential portions of the Arkun-Beau-Jumbo Project to save on rents and rates, and has a similar plan for certain other projects.

“We’ve been holding onto ground for quite a while and even though it’s cheap exploration, we just don’t have the resources to do it,” Jones adds.

“So we’re trying to maximise the return on the money we’ve already spent with the limited team that we’ve got, and we’ll see if we can do some deals.”

The bigger picture

Asked where he’d like to see Impact in 6 months’ time, Jones is clear that he wants to be making good headway on the Lake Hope PFS, which is on track for completion by the end of this year, and which should shed more light on the processing opportunities available.

Similarly, getting HPA products from Lake Hope into testwork with potential offtake clients is just as important.

“In this space, mining is no problem. We’ve got the deposit, it shouldn’t be an issue. There are always challenges in scaling up a new metallurgical process, but we’re talking about something simple and straightforward,” Jones says.

“It’s not bells and whistles and multiple reagents and all those sorts of things, so we don’t anticipate any trouble there. It’s a matter of then providing the product to the client at the end.”

In the end, Jones and the Impact team know where they’re going, it’s just a question of which route is best to get there.

“It’s not bells and whistles and multiple reagents and all those sorts of things, so we don’t anticipate any trouble there. It’s a matter of then providing the product to the client at the end

“It’s a project that has a lot of strategic choices in it compared to many other projects. If we’d found a gold or copper deposit, we know where the deposit is and we build the plant next to it, and then we get a concentrate or gold bars and we sell them, they’re easy to sell,” Jones explains.

“In the bulk commodity space, it’s a little bit more challenging. There are many source materials to make HPA out of, it’s a matter of how you process it, and we’ve got a number of strategic choices available to us there.

Then it’s the nature of the product and what sector of the market we decide to specialise in. There are, again, strategic choices to be made about which marketplace we’ll play in. Is it LED or is it batteries? Those are the two main uses. Where’s the volume? Is there something that we can make cheaply, for example, in the LED market, which suddenly opens up a big bulk offtake agreement? That would be the ideal thing in a couple of years.”

Write to Oliver Gray at Mining.com.au

Images: Impact
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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.