Andromeda Metals higher on signing high purity alumina MoU with AEM Technologies

Andromeda Metals Ltd (ASX:ADN) has signed an MoU with AEM Technologies Inc to explore a joint technical and commercial development under which the company can access AEM’s patented process to construct a facility to produce high purity alumina (HPA) using ADN kaolin. ADN and AEM, part of the Advanced Energy Minerals group, have also entered an initial 90-day exclusivity period to explore a HPA licensing transaction that includes testing ADN kaolin feed, process feasibility studies and potential licensing and marketing arrangements. AEM’s Cap Chat HPA Process Plant in Quebec, Canada, uses its patented process to make 99.99% (4N) and 99.999% (5N) pure HPA and is the only facility globally that is capable of producing this from a kaolin feed. During the exclusivity period, Andromeda will carry out further due diligence and testing on the AEM HPA process, with a large sample of ADN kaolin sent to Cap Chat. Shares have been as much as 17.1% higher this morning to A$0.24 while the market cap is approximately A$442.9 million. “Right partner to drive commercialisation” The MoU signed with AEM will see kaolin samples evaluated using the AEM proven process to determine suitability for HPA manufacture. This will potentially lead to the construction by Andromeda of a HPA plant under a licensing agreement with AEM - which could also include the marketing of HPA manufactured product by ADN through AEM’s global distribution network. Andromeda managing director James Marsh said: “We have known for some time that our kaolin feed was a premium material for HPA production, but we have taken our time in order to be extremely thorough in identifying the right partner to drive this opportunity forward. “Andromeda considers that having access to proven commercial technology in this sector will allow us to fast-track this HPA opportunity towards commercialisation.” Proven premium feedstock for HPA In February 2019, Andromeda announced results from a third round of enhanced HPA metallurgical test-work of halloysite-kaolin from the Great White Project (75%-owned) after testing had shown that 4N purity could be achieved with only one stage of purification - confirming it to be a truly world-class feed material for HPA production. Round one preliminary testing carried out by Bureau Veritas, UniSA and the University of Newcastle had already achieved a purity of 99.9855% from an over-refined sample where impurities had been introduced. A second round of testing conducted by Perth based BHM Process Consultants used a more suitable halloysite-kaolin sample and gave an Al2O3 purity of 99.9946% with only a single stage of purification. The third round of testing was undertaken to confirm that the single-stage purification result was repeatable and to also determine if even higher levels of purity were possible. Results confirmed that producing 4N HPA from a single-stage purification process is fully achievable and repeatable when using the high-purity halloysite-kaolin as a feed. Andromeda also holds a 100% interest in the Mount Hope Kaolin Project, which is around 160 kilometres southeast of the Great White Kaolin Project JV with Minotaur Exploration Ltd (ASX:MEP), and plans to test samples to determine suitability as HPA feed - given the quality of the kaolin resource. Total 4N+ HPA demand by market segment (tonnes). Source: CRU. HPA demand and supply outlook HPA is used primarily to make LED lighting and increasingly ceramic coated separators (CCS), a key component of Electric Vehicle Lithium-Ion Battery (EV-LIB) cells. The LED industry is the primary driving force behind 4N+ HPA demand – where demand is growing at a 19.8% CAGR (2020-28) from a high base – with demand for CCS growing at a higher 24.5% CAGR, but from a much smaller base. Overall, 4N+ HPA annual demand is set to quadruple between 2020 and 2028 (CAGR 18.7%) to exceed 100,000 tonnes per annum in 2028 with current 4N HPA pricing of US$24,000/tonne. AEM chief executive officer Julian Ford said: “Access to Andromeda Metals' high-quality kaolin projects will help AEM in its goal to be the preferred supplier of HPA to the world's new Electric Vehicle's Lithium-Ion Battery giga-factories and global LED manufacturers.”