Impact Minerals (ASX:IPT) has signed a binding term sheet with privately held Playa One to acquire an 80% interest in the Lake Hope High Purity Alumina (HPA) Project in Western Australia.
Signing of the term sheet has granted the company an opportunity to be a low-cost entrant into the HPA chemical market, which represents a ‘high-margin’ business forecast to grow strongly over the next decade.
The company says the project is represents a dry lake bed and is host to a globally unique deposit of ‘high-grade’ aluminium clay minerals in the top few metres of the lake bed on which the project is situated, which demonstrates unique physical and chemical properties that allow for low-cost mining and offsite metallurgical processing through a novel and cost-disruptive acid leaching process.
Impact notes preliminary economic studies indicate that the production of HPA and related products from Lake Hope will be cost-competitive with current producers and other developers in Australia and around the world.
Key terms of the binding term sheet include Impact delivering a $25,000 cash payment for a 6-week option to complete due diligence and, if satisfied with due diligence, completing an additional payment of $175,000 to execute the option of sole funding a Prefeasibility Study (PFS).
Other terms include Impact issuing 50 million fully paid ordinary shares (escrowed for 12 months), as well as an additional 30 million unlisted options exercisable at $1.125 vesting 12 months from the date of issue and expiring on 1 December 2025 to the shareholders of Playa One.
Addressing the planned acquisition, Impact Minerals Managing Director Dr Mike Jones says: “This is a watershed day for Impact Minerals and its shareholders. We believe the Lake Hope project presents an unrivalled opportunity to put the company firmly on the path to low-cost production in the rapidly expanding and high-margin HPA business. Combining a globally unique deposit within the top few metres of a playa salt lake and a straightforward metallurgical process offers a disruptive entry into the HPA space.
The deposit was discovered in the past two years by Roland Gotthard, the major shareholder of Playa One, in a classic case of lateral thinking about the nature and source of aluminium-bearing minerals.
“We believe the Lake Hope project presents an unrivalled opportunity to put the company firmly on the path to low-cost production in the rapidly expanding and high-margin HPA business”
We are pleased to welcome Roland on board at Impact as Project Manager to lead the company towards production from Lake Hope over the next few years. We believe that the unique properties of the deposit will allow for fast-tracking of the statutory approvals process for both mining and processing, and we aim to lodge a mining lease application by mid-year.
We will also be building out our capabilities in metallurgical processing and end-product development to cater for the specialist requirements of the end users of HPA.
I believe this to be a transformational acquisition for Impact, and myself, the board and the entire impact team are looking forward with great enthusiasm to the challenge that awaits us and ensuring that Impact Minerals is the next “playa” in HPA.”
The company also notes upon completion of the PFS, it can enter into an incorporated joint venture (JV) with Playa One shareholders and immediately acquire the 80% interest in the company by issuing up to 120 million shares capped at a maximum value of $8 million.
In addition, upon completion of a Definitive Feasibility Study (DFS), an additional 100 million shares capped at a maximum value of $10 million will be issued to Playa One shareholders.
Meanwhile, results generated from 99 drillholes completed by hand-held auger and push tube methods across the project’s 2 lakes, have returned very ‘high-grades’ of aluminium oxide of between 24.5% and 27.8% Al2O3.
These results have been returned at a time in which the forecast for HPA demand and price is reporting up to US$15,000 and US$32,000 per tonne, with a median conservative price assumption of US$20,000 per tonne.
Annual demand for HPA is also predicted to increase from 45,000 to 50,000 tonnes in 2021-22 to about 250,000 tonnes by 2030 due to the demand for LED and lithium-ion battery uses, both underpinned by global decarbonisation and electrification initiatives.
As of 1.45pm AEST Impact Minerals’ share price had increased by 25% on the ASX.
With the binding term sheet now signed, Impact Minerals announces a maiden JORC 2012 Mineral Resource Estimate (MRE) for the project is currently being prepared, with further infill drilling currently in progress. Completion of a Scoping Study is expected to follow.
Impact Minerals is an ASX-listed exploration company focused on unlocking major discoveries in world class terranes. The company seeks to acquire an 80% interest in the Lake Hope project in Western Australia, which represents an advanced HPA asset located near the township of Hyden within a tier-one jurisdiction.
The project is host to an exploration target which contains HPA alumina within the top 0.5 to 1.5m, which has been calculated from initial drill results of between 2.6 million to 4.7 million tonnes at a grade of between 24.3% Al2O3 and 26.7 Al2O3 for a contained 0.63Mt to 1.25Mt of Al2O3.
Images: Impact Minerals Limited
