- King River Resources’ flagship project SSM has favourable location and infrastructure, including sealed major highway, port, dam and hydroelectric project, and skilled workforce
- Strong mineral resources and flat-lying geometry enhance the mining opportunity with low wastage
- Initial strategy is focused on scaling Speewah Project to HPA production, with V2O5, TiO2 and Fe oxide as co-products at a later stage, to reduce capex and enhance returns
- COVID-19-led tech adoptions have further fuelled technology markets using HPA as the precursor material
Australian specialty metals explorer, King River Resources Limited (ASX: KRR) remains ahead of the curve with its efficacious efforts and activities despite unnerving challenges presented by the COVID-19 situation. Notably, the Company made a domineering accomplishment concerning its Speewah Specialty Metals Project, as KRR successfully achieved the production of greater than 4N or 99.99% High Purity Alumina (HPA) during late-April 2020.
Other wholly owned projects of the Company include Mt Remarkable Gold Project and Treasure Creek Gold-Copper Project.
King River is currently compiling the Prefeasibility Study (PFS) into the Speewah Project, with its plan centric to firstly scaling to HPA production, with co-products such as Fe oxide, V2O5 and TiO2 to be produced at a later stage but not part of the PFS. This approach is expected to substantially reduce the project size, with potential for maximising returns and reducing capex.
Consistent progress and steady developments at the SSM project have been bolstered by a range of aspects that enhance the lucrativeness of the project. Let us look at the factors that are fuelling the growth of King River Resources’ SSM project.
Location and Infrastructure Advantage
Western Australia-based Speewah Specialty Metals Project is located around 110km southwest of Kununurra in the East Kimberley Region. The location allows KRR to utilise the expertise of the Kununurra skilled workforce and industry engaged with the Argyle Diamond Mine servicing.
Proximity to Wyndham Port and Ord River Dam has conspicuously assisted the exploration endeavours around the project. Meanwhile, the nearby hydroelectric project is useful in ensuring the fulfilment of power requirements in a cost-effective manner. The sealed major highway further enhances the connectivity of the Speewah Specialty Metals Project, augmenting its overall potential.
Mineral Resource and Geometry
An ERM Group company, CSA Global Pty Ltd estimated JORC resource of 4.7 billion tonnes at the project. The mineral resources (Measured, Indicated and Inferred) accounted for 4,712 million tonnes at 0.3% V2O5, 3.3% TiO2 and 14.7% Fe, at a 0.23% V2O5 cut-off grade from the Central, Buckman and Red Hill deposits.
The Central deposit, reported at a 0.23% V2O5 cut-off grade, comprises a Total Resource of 1,240 million tonnes at 0.31 V2O5, 3.3% TiO2, 14.6% Fe, 12.5% Al2O3 and 4.7% MgO.
The flat-lying geometry of the project with a conceptual pit shell also complements the ongoing PFS operations at the project. Its geometry allows the Company to take up the significantly smaller PFS plan, which is based on a smaller scale High Purity Alumina operation.
Speewah mineralisation has a flat-lying geometry, which presents an opportunity for mining with minimum waste.
Additionally, an earlier study by CSA Global modelled a preliminary pit shell of 4.2km x 1.2 km, which had a very low strip ratio of 0.4. It, therefore, reduces the overall wastage and augments the cost-effectiveness of the project.
Metallurgical Process Competency
KRR produced >4N (99.99% Al2O3) HPA utilising a new process, which was developed by its metallurgical consultants TSW Analytical Pty Ltd (TSW).
In late-2019, the metallurgical consultant made a breakthrough in aluminium (Al) extraction as the first precipitation product directly from sulphuric acid leach solution containing V, Ti, Fe, Al, and Mg. Several metallurgical developments following the process discovery have been made that allow the high recovery of HPA.
The Company is currently carrying out the HPA testwork and analysis for improving the efficiency of the Stage 2 purification, which gave KRR the capacity to produce >4N HPA. The focus remains on ensuring that all the HPA phase is alpha-alumina through an increase in calcination temperature and testing. The Company, through the ongoing testwork and analysis, is planning to report HPA to 3 decimal places.
The social and economic elements have been propelling the global HPA market, strengthening outlook for the SSM project. Growing technological focus has stimulated the demand for HPA, which finds application in high technology markets. Innovations amidst the pandemic remained at the forefront, providing robustness to technology adoptions.
Increasing dependency on the tech regime has skyrocketed demand for semiconductors, which are primarily used in latest tech devices. Meanwhile, growing environmental concerns and focus to conserve energy have boosted the popularity of energy-saving light-emitting diode and battery markets.
Demand for HPA as the precursor material has been kicked off by the increasing manufacturing of synthetic sapphire glass, which is used as a substrate in LED lights, semiconductors and laser markets. Furthermore, HPA-coated separators are used for the manufacturing of extensively used lithium batteries.
A CRU International detailed marketing study has indicated that over-the-counter transactions of 4N HPA presently commands a price of approximately US$24,000 each tonne. The study indicated that with growing demand, HPA is expected to attract higher rates that altogether would enhance the potential of Speewah Specialty Metals Project.
By the end of trading session on 1 June 2020, KRR stock settled at $0.057, inching upward by 1.786% from its previous close. The stock in the past three and six months has given a return of 100% and 107.41%, respectively.
(Note: All currencies in Australian Dollar unless or otherwise stated)
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.