FYI Resources Ltd (ASX:FYI) (FRA:SDL) is positioning itself to be a large producer of 4N and 5N high-purity alumina (HPA) in the rapidly developing high-tech product markets and anticipates an active and progressive six months.
The company has developed an innovative processing flowsheet design demonstrating the capability to produce high-purity, high-quality HPA at the lowest cost quartile for capex and opex from its Cadoux Kaolin Project in Western Australia.
Its plan includes a proposed value-adding processing facility in the industrial port centre of Kwinana, south of Perth, Western Australia.
The site of FYI's proposed value-adding processing facility at Kwinana.
"Outstanding" trial results
FYI’s recent production trial in collaboration with Alco of Australia Ltd delivered results described as "outstanding", consistently achieving purity levels higher than 99.998% aluminium oxide.
The analytical results suggest the trial achieved purity levels higher than anticipated due to progressive enhancements to the flowsheet and improvements to operational procedures from previous trials, including the use of an alternative feedstock supplied by Alcoa (NYSE:AA).
FYI considers the outcome to be of significant relevance in improving project economics for potential commercial production and a key condition to the Alcoa (NYSE:AA) joint venture memorandum of understanding (MoU) has been achieved.
Foster Stockbroking said the results, which produced samples from the Cadoux project with average purity of five nines (5N) Al2O3 not only validated the innovative flowsheet and metallurgical process, but also the end-to-end operation of the pilot plant, which operated continuously over seven days.
“Critically, the operation and demonstration satisfy one of the Alcoa (NYSE:AA) JV MOU conditions."
The trial samples are now set to undergo further product qualification in end-use markets and will be delivered to potential offtake parties for further product qualification, including in the LiB and LED lighting markets.
Continuing quality control
Some HPA from the joint FYI and Alcoa (NYSE:AA) pilot plant trial was retained for detailed internal analysis and product phase work.
The additional pilot plant trial HPA samples will be forwarded to EAG Laboratories in New York, USA, for further independent, elevated Glow Discharge Mass Spectrometry (GDMS) analysis to provide supplementary data that is intrinsic to the level of purity that has been achieved by the collaborative trial production.
Valuation upside potential
Foster said: “We note further drivers of value in the Cadoux project include life extension, potential production capacity upgrade, emerging scope for 5N product and/or inclusion of by-product revenue, deliberately omitted by the DFS.
“We continue to recommend FYI as a BUY with an unchanged price target of $0.68/share, due to its long life, high-grade kaolin asset, and low-cost processing HPA refinery project.”
Catalysts for the stock include:
- FEED and FID and commencement of the Cadoux HPA project;
- Customer offtake MOUs and marketing relationships;
- Updates on financing arrangements;
- Updates on the Alcoa (NYSE:AA) JV;
- Updates on LOM extension, capacity upgrade, 5N products, and/or by-products; and
- Optimised DFS in 1H21.
FYI has attracted strong interest from North American investors prompting the company to start the process of seeking quotation on the US OTC Markets Group OTCQX as a secondary listing.
OTCQX is the highest tier in the OTC markets, a platform that offers an electronic quotation and trading service that will enhance the visibility and liquidity of FYI securities and accessibility to potential investors in North America.
According to the company, North American investors have shown interest as a result of some milestones achieved and potential demonstrated by it including:
- FYI’s progress on the innovative and fully integrated high purity alumina (HPA) strategy, which helped the company in attracting high calibre corporate and counterparty interest;
- Demonstrated value outlined in the company’s published DFS;
- Leverage that HPA offers in the burgeoning EV and power storage markets; and
- Potential partnerships and opportunities in North America.
FYI already trades on OTC markets on the Frankfurt Stock Exchange under code SDL.F and the Munich Stock Exchange under the code SDL.M.
The Frankfurt and Munich listings have provided exposure for the company to European investors and FYI has observed increased trading volumes through these platforms over the past several months with overall European-based trading tripling.
Frankfurt Stock Exchange is the world’s third-largest exchange-trading market, behind the New York Stock Exchange and NASDAQ.
FYI shares on the ASX this week have been as much as 11 per cent higher to A$0.45 while the company’s market cap sits at approximately A$124.4 million.
FYI has various enhancements benefiting its project development such as its proximity to Alcoa (NYSE:AA) in Kwinana (providing ideal infrastructure and support) and receiving support from the Western Australian State Government through lead agency, Department of Jobs, Tourism, Science and Innovation.
Production trials have resulted in outstanding quality HPA which has been supplied for assessment by potential offtake parties.
Watch: FYI Resources says third week of HPA pilot plant testing exceeds aims
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