FYI Resources Ltd. will bring about 25 parties through its pilot plant as it looks to finance the US$178 million needed for its Cadoux high-purity alumina, or HPA, project in Western Australia, but will need to educate the market on the path to start development mid-2020.
The company decided in February to build a test plant in Perth to help confirm and support the theoretical economic cases in the September 2018 pre-feasibility study ahead of the definitive feasibility study due toward the end of November.
The PFS revealed capex of US$178.8 million, including US$86.5 million for a refinery to be built in the Kwinana Strategic Industrial Area and US$22.7 million in contingency, though Managing Director Roland Hill said on the sidelines of the Perth leg of the Benchmark World Tour that those costs could be reduced.
Hill also said Cadoux should enjoy "speed to market" given the "tiny" footprint of both the mine and plant, with little infrastructure or predevelopment needed and a strip ratio of about 1 to 1.
On Sept. 17, FYI announced pilot plant commissioning results from Cadoux feed stock had exceeded the targeted "four nines" grade — 99.99% purity — with final product assays ranging from 99.997% to 99.998% aluminum oxide.
Hill said the test plant was fed with high grade, highly deleterious product different from the run of mine product Cadoux will ultimately produce.
The fact that close to 99.999% purity product can be generated even with "bad" material demonstrated the plant's efficiency and effectiveness, and gives FYI confidence in the potential to produce even 99.999% purity, and not be restricted to one type of product.
This enables FYI to vary its economics around the revenues it can produce through those varying grade profiles, Hill said in an interview.
He told delegates FYI ultimately aims to supplement, and in some places replace, the HPA supply market dominated by bauxite, which is made into metal then hydrolyzed, crystallized then made into a high purity form.
With that process getting more difficult globally as bauxite supply is getting tighter, FYI wants to replace that feed stock with HPA derived from Cadoux's kaolin. Hence the pilot plant's HPA end product will be forwarded to selected potential customers for their internal quality and application qualification testing.
Hill said those entities will be from both the light emitting diodes, or LED, supply chain players traditionally associated with HPA end use and those from the lithium-ion battery world, which FYI is targeting for off-take and financing.
Such players both in the LED and battery world are in China, South Korea and Japan.
FYI is already in discussions with such parties, but the conversations with more traditional "conservative" banks about HPA's battery potential may need to include more of an education process, though the LED market will underpin the investment case for such banks to secure more stable returns.
The more "hybrid" style banks that combine investment banking with other forms of financing are likely to be more interested in the battery thematic, though as Hill earlier told delegates at the Perth leg of the Benchmark World Tour, that investment case is compelling.
He cited CRU forecasts showing HPA's role in electric vehicles' demand growth out to 2025 outstrips other more commonly known energy minerals.
HPA demand from electric vehicles is expected to grow by 400%, which beats those of lithium (325%), cobalt (225%), graphite (180%) and nickel (50%).
"We're not quite on the radar yet, but we're certainly getting there," he told delegates in terms of HPA's place in the battery market, which is largely underpinned by its critical role within the separator between the anodes and cathodes within lithium-ion batteries.
