Impact’s Lake Hope to ‘possibly’ deliver lowest-cost HPA globally

Impact Minerals (ASX:IPT) has released the results of a Scoping Study for its Lake Hope High Purity Alumina (HPA) Project, which shows it could possibly deliver the lowest-cost HPA globally.

The company says the results are based on realistic production and capital expenditure estimates in which the project, which is located 500km southeast of Perth in the tier-one jurisdiction of Western Australia, will have a net present value (NPV) of more than $1 billion and capital investment of $253 million.

The Scoping Study shows that the Lake Hope Alumina Project has potential to deliver attractive financial returns due to its unique properties including delivering HPA for about US$3,300 ($4,714) per tonne nett of by-products, with a post-tax NPV8 of A$1.334 billion (US$933 million) for a capital investment of A$253 million (US$177 million).

This assumes a nominal benchmark production target of 10,000 tonnes per annum of HPA (as used in Feasibility Studies by Impact’s peers) with Impact’s metallurgical process models and using costs similar to current and proposed HPA and similar mining and processing operations.

Impact notes the aforesaid operating cost is significantly lower than costs published by Impact’s peers. For example, Alpha HPA (ASX:A4N) reported US$5,940 and nett of by-products where HPA is produced from a chemical feedstock. FYI Resources (ASX:FYI) reported US$6,217 where HPA is produced by hydrochloric acid leaching of kaolin. These figures are not adjusted for the significant and ongoing inflation of costs since publication. Impact’s costs are in 2023 dollars.

An in-house cost-curve analysis indicates that at an operating cost of US$3,300 per tonne, Lake Hope, to the best of Impact’s knowledge, will possibly deliver the lowest-cost HPA globally, the company says.

The Lake Hope project contains a significant alumina (Al2O3) resource, which could become a major global supplier of HPA due to the unique nature of the deposit that allows very cost-effective mining and processing. This Scoping Study indicates that, as far as Impact can ascertain from published data, the Lake Hope project could be one of, if not the lowest-cost producer of HPA globally, possibly by a significant margin of up to 50%.

Impact Minerals Managing Director Dr Mike Jones says the Scoping Study demonstrates the ‘world-class potential’ of the Lake Hope Project and supports what Impact first thought was possible when it came across the asset.

“If you are playing in the industrial minerals space, at least one of four things has to be true about your mine otherwise you will not make it through the market cycle: the deposit has to be either the biggest, have the highest grade, be the first to market or, preferably, be the lowest cost producer.

The unique characteristics of the Lake Hope deposit, both in terms of mining and processing, look like they could possibly deliver HPA at the lowest cost globally by a significant margin.

Even though we are only at the Scoping Study stage, with all its inherent uncertainties, the financial model demonstrates the world-class economics of the project, which has an NPV of more than A$1 billion, very large operating margins and significant after-tax earnings of A$174 million per year. The ability to deliver sub-US$4,000 per tonne HPA is an extraordinary competitive advantage that Impact will continue to leverage in the current Preliminary Feasibility Study, due for completion in 2024.”

Impact says the Scoping Study has provided a framework for assessing in more detail the metallurgical, engineering, logistical, heritage and environmental factors in the work program for the Prefeasibility Study (PFS).

The Scoping Study provides a production target of 250,000 tonnes of HPA production over 25 years of the project study. The target is based on extraction of an average of 46,300 tonnes of mineralised resources extracted from the Lake Hope deposit.

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Images: Impact Minerals
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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.