Astron says it has already pulled together some numbers around a contemplated “phase two” at the project that will see it go downstream in about 2030 with a mineral separation plant that will churn out a final zircon and titania product. Phase two, that Astron says will likely soak up a further $566 million in capex, will also involve a duplication of the phase-one mining and processing operations.
In a trend that seems to now be happening across several project studies, Astron says it won’t need to put its hand in its pocket for any of the expected $566 million capex to build phase two, as the cashflows from phase one will most likely fully fund it. The second phase is showing a 30 per cent internal rate of return (IRR).
Remarkably, Astron only has a miserly 146.5 million shares on issue, setting up a bit of knee-trembling anticipation about how the free cash that will flow from the expected $363 million annual EBITDA from the two combined phases might be distributed when the mine is fully operational. Perhaps even more remarkably, Astron is predicting the life-of-mine to push out to 58 years once phase two kicks in.
The extended mine life from phase two catapults the project NPV from $852 million post-tax from phase one to a whopping $2.2 billion post-tax from the combined two phases.
Astron Corporation managing director Tiger Brown said: “In 2024, Astron is now poised, after more than a decade of preparation, to oversee the transition of the Donald Rare Earths and Mineral Sands Project into a globally significant and major Australian mining and production operation at a critical time for global energy transition supply chain.”
The company says its project is made up of two adjoining deposits – the project’s namesake Donald deposit and the Jackson deposit. The total resource across both contiguous deposits is a whopping 2.63 billion tonnes grading 4.4 per cent heavy minerals (HM).
The Donald deposit is the more advanced and already boasts an 825-million-tonne resource going 4.5 per cent HM with 17.8 per cent zircon, 7.2 per cent rutile, 28.4 per cent ilmenite, 21.1 per cent leucoxene and 1.7 per cent monazite.
The Jackson deposit is immediately to the south of the Donald deposit and is not yet contemplated within the current mine plan. Jackson weighs in with an 823-million-tonne resource at 4.8 per cent HM, potentially providing additional longevity for the project – although with the current dual-phase mine plan sitting at 58 years, Astron may even have the luxury of leaving Jackson on the bench for a while.
As part of phase one, the proposed JV will mine 7.5 million tonnes of ore per year to produce about 200,000 to 250,000 tonnes per year of HM concentrate and about 7000 to 8000 tonnes per year of rare earths concentrate for 41.5 years.
As soon as practicable after kicking off phase one’s commercial production, the JV will look to double down on its ore production to mine 15 million tonnes per year and pump out about 400,000 to 500,000 tonnes of HM concentrate annually, in addition to 13,000 to 14,000 tonnes per year of rare earths concentrate.
Astron says the rare earths will be processed at Energy Fuels’ White Mesa facility in Utah, in what the company calls a “western rare earths supply chain”, which aligns with the Australian Government’s Critical Minerals Strategy and the US Inflation Reduction Act.
Management says it is also assessing options for HM concentrate processing at its own downstream facility in Yingkou in China and looking at other third-party offtake agreements.
While Astron is perhaps better known for its mineral sands background and the project boasts the biggest accumulation of high-value zircon on the planet, it will nonetheless be the rare earths that do the heavy financial lifting … at least initially.
Astron says the revenue split between rare earths and mineral sands during phase one of the project will be 58-42 in favour of rare earths.
Notably, while Donald contains the more traditional electric vehicle (EV) “light” rare earths, neodymium and praseodymium, it also contains the much harder to find and lucrative “heavy” rare earths, dysprosium and terbium, that are also a key part of the industrial magnets required for an EV engine.
Heavy rare earths such as dysprosium and terbium are really only mined in any significant quantity in China, which adds another unique element to Astron’s Donald project. The company is now steaming towards a final investment decision for the first phase at Donald and management has indicated that it expects to tick that box in September this year.
Mineral sand elements such as ilmenite, leucoxene and rutile are titanium minerals of varying grades.
The vast majority of titanium minerals are exported to pigment manufacturers where they are used for their white opacity in pigments for everyday items such as paint, ink and even toothpaste. Zircon is also used in ceramics for its opacity.
Rutile can be used to make lightweight, strong and corrosion-resistant titanium metal ideal for aircraft, space, defence, medical and sporting industries.
Astron is somewhat of an ASX veteran, having first listed on the ASX back in 1983 under the guidance of current managing director Tiger Brown’s late father, Alex. At that time, its core business was the sale of zirconium materials and chemical product processing in China.
The company continued to morph into various aspects of the zircon market over many years before picking up the Donald mineral sands project in 2004.
And Donald once again looks set to redefine Astron, which has turned its hand to many aspects of the mineral sands market over time. This time, however, it may well be different and on a whole new scale not seen before in the history of the $83 million market-capped company.
If everything goes according to plan, Donald could become a cash cow that throws off money for at least half a century – and lots of it. Execution however, particularly on the rare earths side, will be crucial and metallurgy and processing will be key.
One thing seems almost certain, however, and that is that Astron will likely get a chance to try its hand at mining and prove up its financial models as it has more boxes ticked than most at Donald.
Perhaps most importantly, however, is the fact that it has a big backer with deep pockets in Energy Fuels and that is often the crucial missing link for many projects that don’t quite make it off the study table.
In many ways, Astron’s Donald project has the best of both worlds. Its mineral sands can supply boring, but big and valuable markets for things like paint and ceramics and its rare earths gives it that element of blue sky that could become anything in a world that has become feverish about EVs.
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