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One year ago, Roland Gotthard was thinking a lot about mud.
He had the rights to test the ground under Lake Hope, a playa or dried lake 500km east of Perth in Western Australia, and believed that the ground underneath the lake may contain minerals that could be turned into High Purity Alumina (HPA).
Over a week, he collected 500kg of mud from Lake Hope and sent it off for testing.
Turns out Roland Gotthard was right. Lake Hope had the potential to be a low-cost supplier of HPA.
ASX-listed Impact Minerals were paying attention to Gotthard’s work. As the results from these tests came in, Impact Minerals contacted him and were “astounded at what had been discovered”.
Impact buys into the Lake Hope project
The deposit was discovered in the past two years by Roland Gotthard, the major shareholder of Playa One, in a classic case of lateral thinking about the nature and source of aluminium-bearing minerals.
Dr Mike Jones, Managing Director of Impact Minerals
In March 2023, Impact Minerals signed a deal to acquire 80% of the mining project at Lake Hope, Western Australia from Roland Gotthard’s company. With the signing of the deal, the ASX-listed mining explorer put itself right in the middle of the world’s search for battery metals.
We’re living through a boom in battery metals. Lithium, cobalt, graphite, nickel and manganese are just some of the minerals that are seeing record demand as car makers start producing electric vehicles at unprecedented scale.
Impact Minerals believe there is another mineral that will see a similar boom in demand. With their acquisition of an 80% interest in the Lake Hope project in Western Australia, Impact Minerals want to position themselves as a low-cost producer of High Purity Alumina (HPA) and right in the middle of the world’s search for green metals.
What is High Purity Alumina (HPA)
High Purity Alumina or HPA is an under-the-radar industrial and battery metal that’s known for its superior hardness, corrosion resistance and purity. The material is a staple for LED light globes and experiencing growing demand from future facing industries such as EVs, semiconductors and advanced micro-LEDs.
Source: Market Index
Traditionally alumina (aluminium oxide) is mined as clay for conversion into aluminium metal via an environmentally unfriendly, and energy intensive process, (which is produced by a number of companies including ASX-listed South 32(you should double check this or just remove it). However very few companies globally and only one company in Australia are producing High Purity Alumina.
High Purity Alumina is, as the name suggests, a version of alumina (aluminium oxide) with very low amounts of impurities such as silica or iron oxide. The benchmark level for it to be considered ‘High Purity’ is 99.99% or more alumina with less than 100 parts per million of contaminants. Avoiding these impurities gives the final HPA product greater strength, conductivity and corrosion resistance, allowing it to be used in more high-performance applications. At Lake Hope the HPA can be produced directly from the raw material without the environmental concerns of aluminium metal production.
The scarcity of this metal makes it incredibly valuable. Alumina with 99.99% purity can be sold for between US$15,000 and US$25,000 a tonne. Meanwhile alumina with purity of 99.999% or higher can sell for between US$30,000 – US$50,000.
And demand for HPA is expected to grow. Grand View Research forecasts a compound average growth rate of at least 20% per annum between 2023 to 2030 for the global HPA market – Growing from US$3.2bn in value in 2022 to almost US$16bn by 2030.
As demand continues to grow, the world is going to need more sources of HPA. Unless more sources of the mineral can be found, supply will not be able to keep up with forecast demand.
Supplied by Alpha HPA Limited ASX:A4N
Since securing the rights to earn an 80% interest in the project, Impact Minerals have been working with Roland Gotthard to better understand the Lake Hope deposit. The company is currently in the process of detailed drilling and feasibility assessments.
The great hope lying under Lake Hope
Impact Minerals believe that the Lake Hope project can be an important source of HPA supply.
Since buying a controlling stake in the project, Impact Minerals have been working with Roland Gotthard to better understand the Lake Hope site. The company is currently in the process of initial drilling and feasibility assessments.
Lake Hope is a dry lake that used to contain a body of surface water. Today it contains a deposit of extremely fine-grained (<16 microns), very pure, high-grade aluminous clays in the top few metres of the lake bed.
The company believes that this deposit is unique globally and should allow for a shallow, very low-cost, free-digging operation only a few metres deep.
The target is to produce about 10,000 tonnes of HPA per year, at which rate, Lake Hope could operate for many decades. It should be noted that this number is just a target, and historically, forecasts at this stage in a mining project’s life have erred on the high side by mining explorers and junior miners. It should be noted that those numbers are just targets, and historically, forecasts at this stage in a mining project’s life have erred on the high side by mining explorers and junior miners.
Converting Alumina to HPA
Extracting this high-grade aluminous clay from Lake Hope is only the first step in a two-step process. Once the aluminous clay is extracted, it will then need to be sent offsite to be processed into HPA.
HPA is traditionally produced by taking raw bauxite and converting it to pure alumina by dissolving the alumina in bauxite and then extracting it in caustic soda. This is known as the Bayer process and produces a toxic by-product known as “red mud”.
Impact Minerals want to use a novel process that doesn’t use bauxite and instead uses acid leaching. The company believes this will have significant environmental benefits and will also be cheaper.
Our research suggests this process, and also new processes using acid leaching, are significantly cheaper than the incumbent producers who have operating costs anywhere between US$10,000 to US$20,000 a tonne. The new hydrometallurgical techniques should bring the costs down to around US$6,000 to US$7,000 a tonne.
Dr Mike Jones, Managing Director of Impact Minerals
The economics of this project
We believe the Lake Hope project presents an unrivalled opportunity to put the company firmly on the path to low-cost production in the rapidly expanding and high-margin HPA business.
Dr Mike Jones, Managing Director of Impact Minerals
The company wants investors to understand two separate factors that make them excited about this project:
- A globally unique deposit within the top few metres of a playa salt lake
- A novel but straightforward metallurgical process
Put another way for all the non-miners out there:
- A easily accessible deposit of minerals
- A cheaper way to turn those minerals into HPA
When these two factors come together, Impact Minerals believe it will allow them to be a lower-cost producer in the HPA space. Preliminary economic studies support this idea, with indications that Lake Hope will be cost-competitive with current producers and other developers in Australia and globally.
What next for Impact Minerals?
While Impact Minerals continues the feasibility process and development of Lake Hope, there are a number of other projects it continues to explore.
It has another battery metals project in Western Australia, Arkun, and it is part of the BHP Xplor programme in Broken Hill.
However, the attention of the company is certainly on their opportunity at Lake Hope in Western Australia. Next year, they have plans to reach a 10 tonne mini pilot plant, with aims to scale that into a 1,000 tonne pilot plant by 2026.
The world is going to need more sources of HPA in the coming years as demand is forecast to fast outpace supply. Impact Minerals hope that the aluminous salt-flats at Lake Hope, Western Australia can become a vital source.