Andromeda Metals Ltd (ASX:ADN) is set to start a number of follow on activities after receiving the key environmental approval for its Great White Kaolin Project in South Australia, according to PAC Partners.
The approval has been long awaited and clears the way for activities including pre-FID development items, closing out debt discussions and signing any additional offtake agreements Andromeda can secure.
Given the current retail dominated share register and the imminent commencement of a large long-life development in a unique commodity, PAC Partners said it would not rule out the possibility of strategic or industry type investors to assist Andromeda in its funding package.
The following is an extract from the research update:
Detail of the approval from the South Australia Department for Energy & Mining includes:
- Production of up to 300kt/yr ore (for ~150kt/yr final saleable product) (so potentially covers production ranges for Stages 1-3)
- Term 13 years (of a total 28 year initial mine life)
- Requires $4.5m in environmental bonds (to be paid before commencing any operations) (recall the company had $24m cash end of December)
This key hurdle should clear the way for Andromeda to push ahead with the launch of the Stage 1A initial development over the coming months:
- 100kt/yr ore throughput for 50kt/yr of final product (KCM90 - for paints, and HRM for cement industry).
- Capital expenditure range of $50-60m for the “Starter Sized” Processing Plant and initial infrastructure (roads, water, power). This spending will also benefit latter stages of development.
Andromeda have pointed very clearly to Funding for Stage 1A is under consideration including debt and equity.
In our view:
Given the current retail dominated share register, and the imminent commencement of a large long life development in a very unique commodity and the pressures we have seen on share price, we would not rule out strategic or industry type investors to assist Andromeda in its funding package.
Based on a 60/40 split, funding suggest $35m debt and $25m equity on our estimates needs to be raised by Andromeda.