Impact Minerals Limited (ASX: IPT) - A Developing Australian HPA Story.
In Episode 186 of Coffee with Samso, Dr Mike Jones, the Managing Director of Impact Minerals Limited (ASX: IPT), educates us on the ins and outs of the HPA business.
The HPA (High Purity Alumina) story for Impact Minerals is now all about the economic process of making HPA. There are no longer any questions on the tonnage or the grade. In simple terms, the company is at the business end of the mineral resource sector.
One of the key aspects of understanding Impact Minerals is to have a clear view of the company's business. Impact is in the business of HPA and what that means is that it needs to deliver High Purity Alumina in the 3N or 4N level (Figure 1).
When considering companies like Impact Minerals, the initial association is often with mineral exploration. However, it is important to view Impact from a fresh perspective. In this episode, Dr. Mike Jones discusses the company's current focus on the Pre-Feasibility Study (PFS) phase, which aims to determine the profitability of the Lake Hope HPA project. This shift in focus highlights Impact's commitment to reaching a stage of financial success, distinguishing it from the negative reputation often associated with mineral exploration companies.
Samso's Conclusion
Impact Minerals is a company that often goes unnoticed despite its promising projects. Currently, they are actively promoting the Lake Hope project, which has been discussed extensively by Mike during the past two Coffee with Samso sessions. It is evident that the Lake Hope HPA project holds significant value for the company.
It is worth mentioning that Impact Minerals' Broken Hill project was among the six projects worldwide selected for the prestigious BHP Xplor program. On 17th of January 2023, the company issued a release providing further details about their participation in the BHP Xplor program.
BHP Xplor, an accelerator program introduced by BHP in August 2022, is designed to help provide participants with the opportunity to accelerate their growth and the potential to establish a long-term partnership with BHP and its global network of partners.
Impact received up to US$500,000 in cash payments from BHP over the next six months and gained access to a network of internal and external experts to help guide development in the technical, business, and operational aspects of the company.
This means that the management of Impact demonstrated credibility by successfully participating in and gaining acceptance for the Broken Hill project. This is a significant achievement, as only six recipients were chosen for this program, indicating a high level of quality.
While the market trader may perceive Impact Minerals' market capitalisation of 34.37M as high, there is an underlying value that will yield positive results in the future. The Arkun project, which we discussed in a recent episode of Coffee with Samso, is located in a jurisdiction occupied by Tier-1 resource companies like Anglo-American. This provides strong evidence of its prospectivity (Figure 2).
The Lake Hope project is currently in the "Feasibility" stage, and the initial excitement surrounding it has diminished in the market. However, this does not undermine the value that Impact Minerals is creating for its shareholders.
There are two aspects of Impact Minerals that I appreciate. Firstly, the Lake Hope project is undeniably the company's flagship at the moment. Secondly, there is potential for significant growth from the Arkun and Broken Hill projects.
Tune in to Mike's thoughts here.
Chapters:
00:00 Start
00:20 Introduction
01:20 Updates from IPT
02:16 Economical parameters that make an HPA project viable
05:56 All about High Purity Alumina
07:54 The Cost Curve Analysis
11:23 Discussion about entry into the HPA market
12:43 The HPA space after the commodity market softening
14:07 The market for HPA
16:04 The Arkun Project
20:51 The Forward Plan
24:52 Is Lake Hope is still the Perfect Orebody?
25:33 How should investors view Impact?
26:55 Why should investors believe that Impact will deliver the end story?
29:00 With the current interest rate trend, is it a good time for companies like Impact Minerals?
30:55 Why should investors invest in Impact Minerals?
31:48 Conclusion