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Other Minerals For The Future

Commodities | Jul 03 2023

This story features ALLUP SILICA LIMITED, and other companies. For more info SHARE ANALYSIS: APS

Lithium and co may draw the limelight, but Tim Boreham explores the upside for lesser known minerals and the listed companies that mine them.

By Tim Boreham

The weaker pricing of battery commodities such as lithium, graphite and copper suggests that even the powerful renewables transition story can run out of (solar-generated) steam – if only temporarily.

So what other up-and-coming minerals should investors consider beyond the non-battery staples such as gold, iron ore and uranium? A slew of other underappreciated commodities have widespread industrial applications – including renewables infrastructure.

Sand, for instance, is redolent of languid beach summers but is perceived to be low value and in infinite supply.

But the silica-rich variety is not all about sand castles: these coarse industrial sands have been used in concrete and glass for thousands of years, with more recent applications including oil and gas exploration, cables and mobile phones screens, solar panels and circuitry (Silicon Valley did not get its name for nothing).

Research house IMARC Group estimates a total traded value of $US22.9bn for silica sands annually, expected to grow to $US32bn by 2028.

As demand soars, supply from Asia is being crimped because of environment crackdowns (Sadly for the Saudi Arabians, desert sand is unsuitable).

To date, silica has been mined in Australia only in a handful of locations – and mostly out of the public eye.

So it’s a good time for Allup Silica ((APS)) to be moving to commercialise its flagship Sparkler, 150 kilometres from the port of Albany in WA.

At last count, Sparkler contains a maiden resource of 70mt, suitable for a high-grade beneficiated product (99.5% purity) and with low iron impurities.

As Allup managing director Andrew Haythorpe notes, a quality resource is only the starting point.  

“Mining is the cheap and easy part; it’s the route to market that becomes significant,” he says. “You can have the world’s best silica sands deposit, but if you can’t ship it and export it, it’s not much good.”

Then there’s the clay-like material called kaolin, which is widely used in paper and board making, fibreglass, paints and coatings, ceramics, cosmetics and pharmaceuticals.

Suvo Strategic Minerals ((SUV)) already mines and sells hydrous (wet) kaolin from its Pittong mine and processing plant, near Ballarat in Victoria. Lower-grade dry material is used widely in ceramics.

A quirk of Suva is that Pittong has been operational since 1972, with Suva acquiring the project from its French owners Imerys in late 2020.

Currently, Suva is the only local wet kaolin producer.

Suva chief Hugh Thomas likens kaolin to the uses for petroleum which range from avgas to heavy grease – with prices for the products varying widely.

Suva focuses on the top-end material fetching $500/t-plus, supplying to the likes of Visy and Dulux, Wattyl and Yates.

Suvo recently lifted guidance to production of 5000t in the year to June 2023, generating $3.1m on a break-even.

Output for the current 2023-24 year is tipped to rise sharply to 25,000t, with revenue of $22m and earnings before interest tax, depreciation and amortisation of $4.8m.

After a recent upgrade, the plant has a capacity of 60,000t. The Pittong mine boasts a 5.7mt resource, 3.74mt indicated and 1.96mt inferred.

Further up the road, Suva’s Trawalla deposit measures 12.7mt (9.9mt indicated, 2.8mt inferred).

While kaolin is useful, high-purity alumina (HPA) produced from kaolin could be even more valuable.

The mention of HPA in the renewables revolution is usually met with a blank stare, but HPA is a component in the ceramic separators that separate the anodes and cathodes and thus prevent the batteries from overheating or even catching fire.

HPA also enables the batteries to last for longer. HPA is also used in light emitting diodes (LEDs) and in sapphire glass for unbreakable phone screens.

To date, most HPA has been devised synthetically from the aluminum-making process, but this is expensive and energy-intensive.

A more carbon-friendly way is deriving HPA from aluminum-bearing clay kaolin.

Corella Resources ((CR9)) owns the Tampu project in WA’s Yilgarn Craton region, which the company to be the highest-grade HPA project in Australia.

Following the positive results from an air core program, Corella carried out a 50-hole infill drilling campaign, aimed at upgrading the current JORC compliant inferred mineral resource of 24.7mt to indicated and measured categories.

Covering 1000m of shallow drilling, the sonic rigs will produce core samples in the same way as diamond drilling, but at about half the cost.

The company aims to produce valuable 5N HPA, which has a purity grade of more than 99.999% and is suited for EV and other high-tech uses.

Turning to Mayur Resources ((MRL)), the Papua New Guinea focused company has several revenue-ready projects in the island nation, most notably the Central Cement and Lime Project.

A highly versatile material lime is used in aggregates, cement clinker and in processing non-ferrous metals including copper, nickel and lithium. Demand is expected to soar as Indonesia ramps up its nickel bauxite processing capacity.

Mayur has recently secured early-stage funding for circa $US1m project, which has been deemed as nationally significant by the PNG Government.

All four of the stocks mentioned are low-valued punts on the Next Big Thing.

Corella shares have lost -40% of their value over the last year, ascribing a modest $12m valuation.

Following a $1.2m raising, Corella has $2.78m in the bank to pursue a feasibility study for mining Tampu, as well as working to a maiden resource at its Whitecap and Whitehills project.

All up shares have declined about -20% over the last 12 months and the stock is valued at a mere $2m, less than its March-end cash balance of $3.82m.

Following a $1.6m placement, Suva is valued at $20m and has about $5m in the bank.

Valued at a tick over $50m, Mayur also has a magnetite and mineral sands project at Orokolo Bay in PNG, as well as solar, geothermal and carbon offset projects.

This article does not constitute share recommendations and readers should seek their own financial advice from a property qualified party.

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