Greentech Minerals Ltd (ASX:GTM), which is moving toward an ASX debut, has taken the factors at play in the new critical minerals ‘greenrush’ – the insatiable and growing global demand for green energy, and a geopolitical situation that favours production and manufacturing diversification – to create a simple but attractive business case.
It’s obvious to any observer that mining is undergoing a transformation, where traditional gold miners are re-badging as rare earths explorers and prospectors seeking anything that goes under the banner of ‘critical mineral’.
There is good reason for this enthusiasm for these minerals – they are needed in quantities that outstrip supply for the technologies of the future, as components of batteries, solar panels, electric vehicles, semi-conductors and silicon chips.
In this article:
- Chasing the solar boom
- Simple base case
- Low-cost venture
- Copper exploration in parallel
- The purity curve
- Room for growth
Enter high purity quartz (HPQ), an exceedingly rare but crucial consumable involved in the production of solar panels, silicon chips for semi-conductors – which have recently been in shortage for various reasons – high-end glass and in optic fibres.
But solar panels are the key to rising demand for HPQ. “We can’t head down the renewable path without the stuff,” said CEO Peter Crooks. “HPQ is essential for solar and everyone in the world understands the demand for solar over the next few decades.
“We’ve had a big uptake of solar in Australia but the US and the rest of the world are really driving growth.”
Demand for HPQ is predicted to double in volume by 2030 on the back of solar and in other technological applications, where growth has been significant year on year. Its dollar value is expected to grow by 90% in the same timeframe.
“Think about a 50% increase in volumes of any mineral, or any commodity that you know, by 2030 – it’s really significant.”
At present, most raw HPQ is coming out of North Carolina in the US, as well as India and Russia. When it comes to downstream manufacturing, China dominates.
Simple base case
The company has plans to capture some of this higher-value market as it grows but for now the business case is a simple and sustainable one, which is expected to see it generating revenue within two years of IPO.
Greentech’s base case is to mine HPQ at its tenements near Mt Isa in Queensland and sell it as feedstock, at a 99.96% to 99.99% delivered purity. In this state, it is expected to sell for about A$1,000 per tonne (US$700).
The company is ready to hit the ground running, being very close to infrastructure – just 15 minutes’ drive from the bustling mining infrastructure of Mt Isa, where the feedstock will be crushed and screened – and primed to start mining within six to 12 months.
“I’ve been involved in projects all over the world, in remote locations, and it’s quite remarkable to have a significant mining precinct within 15 minutes of the infrastructure of Mt Isa,” said Crooks.
“We’ve got a JORC-compliant resource with more than five years of production defined and categorised,” he said.
“We’re ready to mine – we’ve got a mining lease and an offtake agreement.
“And that’s a really good place for any company that’s listing as a mining company, as opposed to an exploration company, to start.”
Low-cost venture
Another important aspect of Greentech’s plan is the low cost of getting the venture off the ground – or, to be more literal, out of the ground.
“This stuff sticks up out of the ground – it’s actually mostly in surface outcrops,” said Crooks. “Which means it’s pretty easy to mine and a really basic primary process at a very low capital cost.”
The convenient location, in easy reach of Mt Isa, means there will be no need to set up camp at the quartz tenements.
“We’ll have an ablutions block and a little office in a container on site, and everyone lives in Mt Isa – that doesn’t require much capital. Our likely mining contractor has crushing and screening facilities in Mount Isa,” said non-executive director Michael Etheridge.
Trucking costs will also be low, due to the high-value, low-volume nature of the product.
Copper exploration in parallel
Greentech has all bases covered, with additional exploration potential in its 650-square-kilometre land holding, which is prospective not only for HPQ but also for copper, gold, REEs, phosphates and vanadium, with a particular emphasis on the copper potential of the region.
This common-sense approach to mining speaks of a highly experienced leadership team, including a number of geologists and experts in the field.
Crooks is a mining engineer and he is joined by Etheridge, a geologist, along with metallurgical engineer Campbell Jones. The team's expertise is directly relevant to the task at hand and includes close knowledge of the geology of the Mt Isa region and a history in producing HPQ.
“We’ve got the skillset of a mining company – we’re not financiers or corporate people – we actually understand the business of mining,” Crooks said.
The purity curve
And while the company generates early cashflow from this sustainable mining business, the team will be building out a strategic plan for growth over the next few years, which includes plans to “progress up the purity curve” to sell a more highly refined quartz product to end users in the next few years.
“We have HPQ that is able to be upgraded and that’s one of the things that really differentiates us,” said Crooks.
“Ultimately, we want to be Australia’s first producer of high purity quartz to sell to the end users and this gives us first mover advantage.”
To this end, the company is conducting studies and market analysis with researchers in Germany – investigating how to upgrade HPQ and what the price will look like.
Room for growth
The company’s value proposition as it starts its ASX journey is based around a simple and self-sustaining business with room for growth on the back of the solar boom.
“A lot of companies go out and raise funds for an IPO but you think ‘yeah but when are you going to have to go back and raise more money’,” said Crooks. “Our base case of selling feedstock creates a sustainable business that we can then grow further from and advance into the HPQ top end.”
“We see that our business opportunity is clearly underpinned on a decade timescale by the growth of solar electricity generation,” added Etheridge.
“It’s the growth in the market that gives us that confidence that we can enter it without having to displace an existing supplier – there’s room for new guys on the block.”