Impact Minerals Pivots to High-Purity Alumina - A Potential Company Maker

• Dr. Mike Jones, Managing Director of Impact Minerals, discusses their focus on high-purity aluminum (HPA) due to its unique thermal chemical properties and global demand.
• Impact Minerals aims to find a world-class deposit and is exploring various projects to achieve this. Their recent deal focuses on high-purity aluminum, which has the potential to make a significant impact in the industry.
• The financial details of the deal include an upfront payment of $175,000 cash, 50 million shares, and 30 million options, followed by additional payments based on project completion milestones.
• The company is conducting extensive research and development, with the Australian government providing rebates on eligible expenses. They also plan to either monetize or partner on some existing projects.
• While there are inherent risks and challenges in exploring new metallurgical techniques, Impact Minerals believes in the potential of the HPA market and is optimistic about its future ventures.

Impact Minerals (ASX: IPT) has made a bold strategic move to acquire an exciting high-purity alumina (HPA) project in Western Australia. This has the potential to transform the company and generate significant returns for investors.

What is High-Purity Alumina (HPA)?

High-purity alumina (HPA) is a high-value alumina product with 99.99% purity that commands a significant price premium over traditional smelter-grade alumina.

HPA is increasingly in demand for several key high-tech applications:

• LED lighting - HPA is used in the sapphire glass substrate for bright, energy-efficient LED lights. Growth in LED adoption is driving rising HPA consumption.
• Lithium-ion batteries - HPA is utilized as a coating on the separator between the anode and cathode in li-ion batteries. This enhances battery safety, stability and performance. HPA demand is surging due to li-ion battery sales growth for electric vehicles and electronics.
• Semiconductors - HPA is used to make synthetic sapphire substrates for semiconductor wafers used in electronics manufacturing.
• Specialty fibers - HPA is spun into alumina fibers used in heat-resistant, high-strength applications like aerospace composites.

However, HPA is challenging to produce due to the extremely high purity required. There are less than 10 significant HPA producers worldwide. Limited supply and rising demand have caused HPA prices to increase substantially in recent years. HPA is now classified as a critical mineral by several governments due to its importance in strategic high-tech industries. Impact Minerals aims to become a major long-term supplier of high-purity alumina to meet rapidly growing global demand. Demand is projected to increase from ~30kt pa currently to >130kt pa by 2025, representing a multi-billion dollar market opportunity.

The Lake Hope HPA Project

Impact Minerals has acquired an advanced HPA project at Lake Hope in Western Australia. The project was identified by respected geologist Roland Gotta, who developed a proprietary process to produce HPA from the unique mineralization at Lake Hope.

Key advantages include:

The acquisition provides Impact Minerals with a potentially low-cost, scalable HPA development project.

• Simple, low-cost mining in shallow lake sediments with minimal environmental impact
• Large Mineral Resource likely to support long mine life
• Proximity to infrastructure in a mining-friendly jurisdiction
• Conventional flowsheet with the potential to reduce costs through innovation
• Scoping study demonstrates strong economic potential

The company has acquired the project on attractive terms for an upfront consideration of A$1 million in cash and shares. Additional deferred payments are capped at A$18 million in Impact shares on achievement of development milestones.

A scoping study completed outlines economics

• Low start-up CAPEX of US$43 million
• Average EBITDA of US$104 million pa over 40 years
• Peak EBITDA of US$233 million pa
• NPV(8%) of US$1.23 billion
• IRR of 46%

These results position Lake Hope as a potential low-cost producer with margins that could be 2-3 times existing producers.

Near-Term Value Drivers

Upcoming catalysts that could drive value for investors:

• Resource estimate by early Q2 2023
• Scoping study released by mid-2023
• Metallurgical results from initial test work program
• Mining lease application Q3 2023
• Pre-feasibility study results from late 2023
• Off-take agreements and strategic partnerships

Funding Pathway

Impact Minerals has outlined a clear pathway to funding Lake Hope's development:

• Current cash balance sufficient for initial studies
• R&D tax credits to provide cost offsets
• Future funding options include debt, JV, and strategic equity
• Low capex intensity allows staged expansion funded from cashflow

The company expects to reach development decisions without material equity dilution to current shareholders.

Experienced Leadership

Impact has a proven technical team with experience in developing mining projects worldwide. Managing Director Dr Mike Jones is an accomplished geologist with over 25 years in mineral exploration and project development. He will lead the HPA strategy supported by technical specialists. The project vendor is a highly regarded geologist who will manage the Lake Hope project.

Focus on HPA into Major Growth Sector

Impact Minerals is pivoting into the high-growth HPA sector after an extensive review of strategic options. The Lake Hope Project provides an exciting opportunity to supply a market projected to enjoy strong growth for well over a decade.

The company will focus its resources on advancing Lake Hope as its flagship asset. Other non-core exploration projects will be rationalized to support this strategy. The outlook is for Lake Hope to potentially transform Impact into a mid-tier producer of a sought-after technology commodity. With low hurdles to production and expansion, Impact aims to be a long-life, low-cost HPA supplier to major high-tech manufacturers worldwide.

Impact has acquired an outstanding HPA project on attractive terms to enter a high-growth market. The company is funded to reach major de-risking milestones over the next 18 months. Lake Hope has clear potential to generate transformational value for investors if Impact can execute successfully. The project could position it as a major long-life producer of a critical mineral for high-tech industries.

Investment Thesis

There are several reasons why the Lake Hope HPA project could represent a compelling investment opportunity:

Strong Market Fundamentals - HPA is a niche speciality material with robust demand growth projections, supporting attractive pricing and margins. The market is projected to grow from around 30kt currently to over 130kt by 2025.

Quality Asset - Lake Hope is a potential tier-1 deposit with a large scale, low costs and a long mine life. The scoping study indicates it could be among the world's lowest-cost producers.

Immense Upside Potential - If successful, Lake Hope could generate over US$100 million per year in EBITDA for decades, transforming Impact into a mid-tier producer. There is a scarcity value in HPA assets.

Clear Path to Production - Simple low-cost mining means low capex intensity for a modest initial investment. Impact Minerals has a clear pathway to funded development.

Near-term Catalysts - Resource estimate, scoping study, met test work and mining lease application over the next 18 months can demonstrate Lake Hope's potential and derisk the project.

Proven Leadership - Impact's technical team has extensive experience developing projects worldwide. They are positioned to execute successfully.

Limited Downside Risk - The total acquisition cost is capped at around A$20 million in stock. The upfront payment was modest. Investment can be staged based on results.

Lake Hope offers investors exposure to a high-growth technology commodity via a quality project with a reasonable entry cost and a huge upside if Impact Minerals can achieve production. The near-term catalysts provide opportunities to crystallize value as milestones are achieved on the path to development.