Andromeda Metals is earning up to a 75% interest in the Poochera Halloysite-Kaolin Project which is located approximately 635kms west by road from Adelaide and 130kms south-east of Ceduna on the Eyre Peninsula in South Australia.
High-quality halloysite-kaolin deposits occur extensively across the Project area making this a region of global significance for the mineral with the potential of supporting a considerable long-life mining operation should final feasibility studies determine the Project to be economically viable. The Poochera mineralisation contains variable mixtures of kaolin and halloysite that appear amenable to selective mining to produce low, medium and high halloysite blends for the ceramic and petrochemical cracking markets, along with new nanotechnology applications in lithium battery technology and as a strengthening additive to concrete.
Carey's Well Deposit
A JORC 2012 Mineral Resource estimate has been determined for the Carey's Well deposit. The Mineral Resource has been calculated as 20.2Mt of 'bright-white' kaolinised granite with minimum raw kaolin ISO brightness (R457) of 75 comprises:
|Category||Tonnes (Mt)||-45um Recovery %|
The JORC 2012 Mineral Resource estimate for the halloysite content of 9.7Mt contained within the Carey's Well 'bight-white' kaolinised granite Mineral Resource, with minimum raw kaolin ISO brightness (R457) of 75 comprises:
This material will yield 5.3Mt of halloysite 'bright-white' kaolin product when applying the -45 micron recovery factor with an average grade of 18.4& with the remainder of approximately 50% being largely residual quartz from the weathering process.
Both estimations have been calculated using the most up to date average dry bulk rock density of 1.44 tonnes/cubic metre.
Dry-processing trials conducted on Carey's Well ore has shown that the quartz sand impurities contained within the raw ore can be reduced from an approximate 50% content to less than 1%, proving that dry-processing method is a feasible option for consideration in studies to upgrade the value of the halloysite-kaolin ore at Carey's Well.
Bulk sampling at Carey's Well Dry-processed halloysite-kaolin
Metallurgical testwork conducted on Carey's Well halloysite-kaolin has achieved 4N (99.99%) purity with only a single purification stage, which compares favourably to peer companies and makes it potentially a valuable feedstock for High Purity Alumina (HPA) production.
Strong demand for material from Carey's Well has been confirmed following visits made by company representatives to potential Chinese customers. The Company has received non-binding Letters of Intent (LOI's) for 307,000tpa of dry-processed material and a further 208,000tpa for wet-processed product. In addition, commercial trials are to be undertaken on Carey's Well raw ore following which a number of non-binding LOI's for direct shipping ore (DSO) are anticipated to be received.
ADN representatives with Anpeak China officials
A Scoping Study to consider both DSO and dry-processing at Carey's Well is due to be completed by the end of the September Quarter 2019.
Advantages of the Project are that it has a long mine life, short time to production and low capital expenditure requirements.
Joint Venture Terms
Andromeda Metals entered into a binding Heads of Agreement with Minotaur Exploration Limited (ASX: MEP) on 24 April 2018 over the Poochera Halloysite-Kaolin Project (including the Camel Lake Project) under the following terms:
- Minotaur to grant a 60 day Option Period to Andromeda on payment of a $70,000 non-refundable Option Fee to complete due diligence investigations. Andromeda subsequently exercised its Option over the Project on 22 June 2018;
- Andromeda is then required to sole fund a minimum of $400,000 (inclusive of the $70,000 option fee) within 9 months of signing the Heads of Agreement. Andromeda formally advised Minotaur it had met the minimum expenditure requirement on 23 Janaury 2019;
- Andromeda can earn a 51% interest in the Joint Venture on expenditure of $3.0 million (inclusive of the $400,000 minimum expenditure) within 2 years of execution of the Heads of Agreement (Stage 1 Commitment);
- Andromeda can then elect to sole contribute a further $3.0 million ($6.0 million in total) over a further 3 years (5 years in total) to acquire a further 24% equity in the Project (Stage 2 Commitment);
- Andromeda's interest will convert to 75% on the earlier of completion of Stage 2 or a Decision to Mine is made by the Joint Venture Committee;
- on completion of Andromeda's sole funding commitments, either party may elect not to contribute to a proposed Joint Venture program and budget, in which case its interest in the Joint Venture will be reduced in accordance with a standard industry dilution formula;
- if any party dilutes to less than 5% equity interest in the Joint Venture, their interest will be acquired by the other party for a moderate sum and a 2% Net Smelter Royalty over the Project;
- Andromeda will manage and operate the Joint Venture whilst it is sole contributing and thereafter while ever it holds a majority equity.