PERTH (miningweekly.com) – An updated scoping study to consider wet processing of kaolinised granite at the Poochera halloysite-kaolin project, in South Australia, has increased the expected annual refined kaolin produced at the site, increasing the expected revenues and life-of-mine (LoM) earnings, ASX-listed Andromeda Metals announced.
Compared with the original scoping study, which considered dry processing of the Poochera ore, the updated scoping study increased the initial capital cost from A$9-million to A$13-million, while sustaining capital costs increased from A$9-million to A$11-million.
However, annual refined kaolin produced over the 15-year mine life also increased from 187 000 t/y to 227 000 t/y, with the yield of the refined kaolin increasing from 37% to 45%.
The mining rate of 500 000 t/y of raw material has been maintained for the 7.6-million-tonne production target.
Revenue over the LoM increased from an expected A$1.9-billion to A$2.3-billion, while LoM earnings before interest, taxes, depreciation and amortisation increased from A$844-million to A$1.1-billion, and cashflow from A$798-million to more than A$1-billion.
The project’s net present value has also increased from A$413-million to A$544-million, while the internal rate of return increased slightly from 174% to 175%.
Andromeda said that wet processing allows bulk transport and shipping of filter cake to be used, which has a lower cost per tonne than the bagged transport considered for the dry processing option. Offsetting this transport cost saving, the wet process has a lower concentration of kaolin clay and a significantly higher moisture content in the transported material, so the total transport cost per tonne of final product is increased.
However, the prime advantages identified of wet processing over dry processing at site is that it delivered improved recoveries of refined kaolin clay material made available for sale, generating higher revenues in addition to providing lower processing costs owing to the operating efficiencies of the wet processing plant that is being proposed.
The advantages are partially offset by increased transport and shipping costs and a modest increase in capital costs for the wet processing plant.
Andromeda on Monday said that the project schedule for Poochera was being reviewed given the current Covid-19 pandemic, with a timeline for the project expected with the release of a prefeasibility study.