16/06/2021 - 14:30

King River projects $190m annual cash torrent from Kwinana HPA

16/06/2021 - 14:30

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King River has its sights on a free cash deluge from its proposed $204 million investment in a cutting-edge high-purity alumina manufacturing plant at Kwinana, south of Perth, after tabling a stunning set of numbers in its recently completed project pre-feasibility study. The plant is expected to deliver more than $190 million per annum in free cash flow over an initial 25-year operation.

Tianqi’s new lithium plant at Kwinana signals a shift toward technology metal production in the WA industrial precinct. Credit: File

King River has its sights set on a move into production after tabling a stunning set of numbers in its recently completed pre-feasibility study for the construction of a cutting-edge plant to manufacture high-purity alumina, or “HPA”.

The company is looking to build the plant in the Kwinana industrial complex, just south of Perth in Western Australia, with an estimated $204 million capital cost expected to deliver more than $190 million per annum in free cash flow over an initial 25-year operation.

Interestingly, whilst the company owns a potentially massive feed source in WA’s Kimberley region, a key innovation linked to King River’s proprietary processing route is that the plant could potentially source its feed from a variety of sources, from readily available industrial feedstocks to developing mineral resources.

King River’s simple and modular processing route for the manufacture of a 4N HPA product, which is 99.99 per cent pure aluminium oxide powder, potentially means the plant is not tied to a specific mineral deposit. That delivers a long-life project, underpinning a modelled net present value that tips the scales at an impressive $1.04 billion.

In addition, financial modelling estimates $7.03 billion of revenue and $4.44 billion of free cash flow over the initial 25-year operational period.

Kwinana is perhaps an ideal location for the HPA plant given its ready access to power, gas and water. However it is also linked to various potential feed sources through the port and rail facilities on the doorstep of the industrial hub.

The Kwinana complex is fast becoming an incubator for a host of specialist metal producers with Chinese-giant Tianqi building a lithium processing plant in the industrial park and EcoGraf looking to construct a facility to produce graphitic battery anodes in the precinct.

King River’s proposed Kwinana plant will produce 9,000 tonnes of 4N HPA per annum to feed into the growing global market, positioning the company as one of the key international suppliers outside traditional production centres such as Japan, China, the US and parts of Europe.

King River Resources Executive Chairman, Anthony Barton said:“This PFS has effectively endorsed the company’s strategy to initially focus on entering the global HPA market then consider developments at a later date of other high value/high purity commodities sourced from the Speewah vanadium-titanium and fluorspar deposits.”

“These very positive study outcomes support the Kwinana Project’s transition immediately towards a more detailed definitive feasibility study. Once in full production, the Kwinana Project has been modelled to deliver pre-tax $190m average annual operating free cash flow.”

HPA is a product in demand due to its increasing usage in a range of modern technologies and whilst users may not be familiar with the metal it forms a key part of our everyday lives. Manufacture of LED lighting, smart phone screens and computer monitors are just a few emerging uses of 4N HPA powders.

However, more recently studies by technology groups such as ASX-listed Altech have shown the addition of HPA into lithium-ion batteries not only boosts performance but adds to their longevity, delivering a new and booming market for the product.

King River’s move into feasibility work on construction of a HPA plant came via a rather circuitous route. The company owns one of Australia’s largest vanadium-rich magnetite deposits at Speewah Dome in WA’s Kimberley region.

Whilst King River has looked at various potential paths to monetise the Speewah Dome deposit it was recognition of the alumina content of the immense mineralised system by the technical team that proved a turning point.

Detailed metallurgical testwork on Speewah ores has led to development of a simple processing circuit that uses conventional crystallisation and calcination to produce 4N HPA powder.

However the true value in King River’s process is its adaptability to treat a wide range of ores and precursor products, delivering the planned Kwinana plant a potential smorgasbord of feed from locally sourced material to imported feedstocks.

The process is also readily scalable, hinting that the proposed 9,000 tonne per annum production from Kwinana may be the tip of the iceberg in a marketplace King River says is growing at nearly 14 per cent per annum. It is estimated global consumption will reach 53,000 tonnes per annum by 2028.

Mr Barton said: “The ARC HPA process has evolved through numerous laboratory leaching and precipitation studies undertaken on the mineral concentrates produced from KRR’s Speewah strategic metal deposits in the Kimberley region of Western Australia. The full ownership of the ARC HPA intellectual property, and the modular nature of the engineering, may enhance the future competitive positioning of our HPA products.”

King River has now leapt headlong into its definitive feasibility study for the project and is already engaging various professionals and financiers to fast-track its path to production. With discussions underway with government and landowners to secure a site for the plant at Kwinana, King River looks to be well positioned to become a key player in the global HPA market in the years ahead.

 

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au

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