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King River Resources (ASX:KRR) going from strength to strength with solid HPA project economics

Summary

  • King River Resources’ recently released preliminary feasibility study results outline the significant potential of its Kwinana high purity alumina (HPA) project. 
  • The Company is committed to delivering high value 4N HPA using the industrial chemical feedstock processed at a proposed Kwinana plant. 
  • Limited number of HPA suppliers along with the rising demand for HPA in the technology and energy sectors offers a significant opportunity to KRR for leveraging the competitive advantage of the project.  

King River Resources Limited (ASX:KRR) is making headway to become a significant high purity alumina (HPA) producer, with the recently completed preliminary feasibility (PFS) study highlighting the economic viability of the Company’s production plans. 

DO NOT MISS: Expert Talks With Kalkine Podcast Mr Anthony Barton Chairman Of King River Resources

The study on the HPA project was completed through the Company’s s wholly owned subsidiary ARC Specialty Metals Pty Ltd. The PFS outcomes proved to be another feather in the Company’s cap as it affirmed that KRR’s 100%-owned HPA project, which would be located in the Kwinana industrial area, is in a strong position to become a global HPA participant.

The PFS metallurgical testwork programmes culminated in the successful production of 4N HPA (≥99.99% purity) on a laboratory scale by the ARC HPA process, which involves relatively simple hydrometallurgical purification. 4N HPA is a crystalline white powder, which is almost pure aluminium oxide (Al2O3).

With this backdrop, let us explore the robust PFS economics that puts KRR in a dominant spot to leverage HPA opportunities in the explosively growing clean energy and high technology industries. 

ALSO READ: Milestone reached! King River Resources’ Kwinana HPA PFS confirms technical and economic viability

Robust economics  

The HPA project has initially been modelled on an operation for 25 years. However, the financial model’s timeframe is not constrained by a mineral resource since it is based upon an industrial chemical feedstock, thereby allowing the operations to extend beyond 25 years. 

On the basis of the PFS data, the Company undertook a financial evaluation, confirming both the project’s value and economic robustness from the commencement of production.

ALSO READ: King River Resources (ASX: KRR) Turbocharges HPA Prefeasibility Study

Competitive capital and production costs

The Kwinana HPA project has a pre-production capital cost estimate of around AU$203 million, which includes approximately AU$27 million for contingency. The Company has evaluated a production cost of AU$8,987 per tonne or AU$8.99 per kg of HPA.

The pre-production capital cost estimate is competitive, mainly due to the relatively simple purification refining process.

Additional revenue stream potential from by-product

The ARC HPA process also yields one by-product for sale, which is actively traded within Australia and globally. With an estimated market size of around 150 million tonnes for US$2.2 billion in 2018, the by-product has excellent growth forecasts. The powdered form of the by-product is used in the agricultural and construction industries. 

ALSO READ: King River Resources (ASX:KRR) Turns In Healthy March Quarter with HPA Production Progress

The Company anticipates producing around 77,000 tonnes of the by-product per annum, representing under 0.05% of the global market and less than 2% of the domestic production market. 

KRR intends to negotiate by-product sales to existing end-users in the Kwinana and Perth metropolitan areas. Notably, the Company’s PFS financial analysis has not taken into account the pricing of by-product sales for calculating the project’s annual revenue. 

With the PFS completion, the next study milestone that KRR has set its sights on is the completion of the Definitive Feasibility Study. Meanwhile, the Company is continuing to evaluate necessary project approvals and will be exploring funding initiatives to take the project forward to production.

Riding high on the positive PFS outcomes and the successful testwork completed to date, KRR is well positioned to continue the project development through to the targeted plant start-up in Q1 2025.

KRR stock was trading at AU$0.026 on 2 July 2021 (AEST 2:03 PM).

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