Hill End Gold
MC – $18.4M
SP – 13c
Cash in Hand as of 31 December 2017 - $2.92M
Cash flow expected in March Quarter 2018 - $1.40M
HEG issued an announcement today on their HPA project in Yendon, Victoria.
Key points in today’s announcement are:
The test results show that Yendon’s kaolin resource is highly responsive to acid leaching. Most of the leaching is complete in 30 minutes;
Fine sized (i.e. <63 microns) kaolin concentrate means lower acid concentrations can be used without any significant impact on Alumina recoveries;
Process involves low temperatures, meaning lower energy consumption;
All the above shows the potential to reduce Capex and Opex for the project;
More importantly, HEG plans now to undertake the next level of testing with the aim of producing 99.999% HPA (5N) which makes a huge difference in the final product price (i.e. almost double!).
Below is some fundamental analysis on the company and a comparison with its closest peer, FYI (another favourite of mine).
HEG Management and Top 20 Shareholders
As you can see there, HEG’s is one of the best registries on the ASX. Key things to note in this list are:
None of these key holders did not appear in the 2016 list. Every big name seems to be attracted by the HPA project;
After vending their kaolin resource, Tolga Kumova and Tom Eadie remain as key shareholders of the company. Kumova has increased his positions, totaling up to 6.71% by December 2017. Eadie also holds the seventh position in the list;
Kumova and Eadie continue their association with HEG and will help the management in finding off-take deals;
Aldo Sacco, Stephen Tomsic, Neeshams and Evan Cranston also feature the list;
Regal Funds became a substantial holder with 5%+ holding, in December 2017.
High Purity Alumina Project
HEG has acquired 100% of the High Purity Alumina (HPA) Project from Pure Alumina Pty Ltd, which has rich kaolin deposits on tenements near Ballarat, Victoria. HEG has completed resource drilling of the initial deposit at Yendon, near Lal Lal and has outlined 3-4 times more kaolin than expected from previous drilling in the 1980s. Resource estimation and metallurgical test work are underway and leading to the completion of a Preliminary Feasibility Study by second quarter in 2018.
The market for HPA is in electronics, such as LED lighting and lithium batteries and is forecast to expand at 15-20% compound annual growth rate over the next six years. HEG’s HPA Project is anticipated to produce a significant proportion of global HPA supply at low unit costs.
Project Sites
What is High Purity Alumina (HPA)?
Current Players
Historical Challenges with HPA Production
HEG’s HPA Strategy
HEG intends to produce a significant proportion of the global demand for HPA at a low cost. Reduction in the product cost profile over time will encourage substitution of HPA/synthetic sapphire in products containing high strength, scratch-resistant glass and expected new uses in electronics, military and medical technologies will broaden the market base and drive demand.
HEG boasts to assemble a highly experienced team to undertake the necessary studies to determine the optimum processing route and complete process design and project costing. The aim is to become the supplier of choice for the HPA market by:
Meeting customer specs every time
Providing consistency of supply
Working with customers to develop optimum specification for new technologies
This will be achieved by:
Producing a consistent kaolin feedstock for the HPA facility
Using a range of metallurgical technologies to produce reliable products
Reducing the consumable and energy requirements and maintaining stable process parameters
Developing close working relationships with our customers to become their supplier of choice
Continued research into process improvements to reduce costs and improve efficiency
Through the acquisition of Pure Alumina Pty Ltd and the vendor’s Ballarat tenements, HEG has secured a high quality feed stock resource in the kaolin deposits at Pittong and Lal Lal. Drilling has been completed on the Yendon deposit near Lal Lal and the key characteristics that make this deposit preferable to similar material is its easy beneficiation to a fine-grained, high purity kaolin, low level of impurities and relative ease of removing those impurities. This combination is expected to allow for a very low cost processing route.
Initial leach testing has showed that the kaolin is very amenable to an acid leach process to remove impurities. It is possible that high temperature and high pressure leaching in the early stages of the process may not be required, again reducing operating costs and also the size of the processing infrastructure. This will be examined as part of the feasibility studies.
The preliminary feasibility study for the HPA Project is planned to be completed in the second quarter of 2018.
HEG’s Progress so far
Key milestones (with reference to the above figure)
Progress comparison with FYI
Why am I tipping HEG?
HEG and FYI both carry similar resources, targeting same final product. HEG always had an edge, potentially due to the hi-profile players involved in the registry. FYI has had a nice little run recently, until which it was sitting behind HEG, and now has a market cap approximately 50% higher than that of HEG.
IMHO, now it is HEG’s turn to run, and possibly to finish again above FYI, with the anticipation of a very promising PFS.
(20min delay)