Impact Minerals Poised to Capitalize on Surging HPA Demand with Potential Low-Cost Production

• Impact Minerals has a high-purity alumina (HPA) project in Western Australia with strong economics and the potential to be a low-cost producer
• Recent scoping study shows attractive numbers - NPV of A$1.34 billion and IRR over 50%
• Straightforward 5-stage process to produce high purity 4N (99.99%) aluminium powder from a unique salt lake deposit
• Focus now on optimising the process and producing enough material to start the qualification process with customers
• Targeting getting the first batch of material to customers by mid-2024 to start qualifications

About Impact Minerals

Impact Minerals, an Australian mineral exploration company, has unveiled promising results from a scoping study for its emerging high-purity alumina (HPA) project in Western Australia. HPA is a niche commodity with growing demand for use in lithium-ion batteries and LED products. Securing a low-cost, stable supply of HPA is becoming increasingly important as these markets expand globally. Impact's salt lake deposit and processing method have the potential to position the company as one of the lowest-cost HPA producers worldwide.

Highlights from Impact's Scoping Study

The recently released scoping study paints an attractive economic picture, with a net present value of A$1.34 billion and an internal rate of return exceeding 50%. While early stage, these exceptional numbers provide validation that the development of a major HPA mine at the site is commercially viable. Impact's Managing Director Dr. Mike Jones explains that "it's going to be an extremely cost-effective producer of HPA, one of if not probably the lowest cost producer of HPA globally."

According to Jones, Impact aims to achieve HPA production costs under US$10 per kg. Comparably, existing producers have costs estimated between US$15-30 per kg. With profit margins already high in the HPA market, having such a significant cost advantage positions Impact strongly in commercial negotiations and provides a buffer against potential future price declines.

Simple, Low-Cost Production Process

The unique attributes of Impact's Last Hope salt lake deposit in Western Australia enable simplified low-cost production through a straightforward 5-stage sulfuric acid leaching process. As Jones elaborates, "The intention is to dig up the top meter or two at the lake bed, stockpile it and then draw it down over a three-year period, continuously...take that offsite for processing...a unique set of evaporite minerals which lend themselves to a very straightforward sulfuric acid leach process and nothing complicated about it."

Having already completed testing on the first three processing stages, Impact is on track to finalize the remaining optimisation by year-end 2022. Large-scale test production will commence next quarter, yielding the final HPA product samples. These product samples are essential for initiating customer qualifications and securing off-take agreements in 2024.

Strategic Priorities for Growth

Impact's immediate focus centres on validating and optimising its HPA production route. As Jones explains, “The key for us is making sure that the metallurgical process that we have for the unique Last Hope deposit is doing its job...that we can produce high purity aluminium."

Beyond this objective, management aims to accelerate mine permitting, feasibility studies, and engineering reviews over the next 18-24 months. Concurrently, supplying product samples to potential customers and negotiating initial off-take agreements are viewed as pivotal near-term catalysts. Successfully achieving these strategic milestones will demonstrate commercial viability to investors and open doors for attracting a strategic partner for development capital.

Exploring Funding Options

Development costs for Impact's 10,000 tonnes per annum HPA refining operation currently projected in the scoping study will likely require tens of millions in capital investment. However, Dr. Jones believes Impact can avoid needing large capital raises in the short term. Ongoing economic studies and establishing initial customer deliveries will help support and de-risk raising smaller amounts from existing shareholders in the interim.

Additionally, Impact plans to pursue Australian government grant funding programs already awarded to peer HPA developer Alpha HPA for its refining plant. These public infrastructure grants and cheap debt arrangements for domestic mineral processors could cover substantial capex requirements for Impact's proposed HPA pilot and modular production plants. Attracting a strategic partner through a customer qualification agreement would offer another capital funding avenue.

Significant Upside Potential

Impact Minerals clearly retains substantial business execution risk as an early-stage company venturing into a new commodity. Nonetheless, the company's scoping study and production route testing results reveal Impact's Last Hope project represents an intriguing, high-upside opportunity in the flourishing global HPA market. If management can continue efficiently developing and optimizing the project's process design and economics as planned, Impact controls a prime asset to address growing HPA supply shortages with a projected low-cost output profile superior to existing producers. Realising this potential appears attainable through the company's focused strategic priorities in the period ahead.

Investment Thesis for Impact Minerals

• Low-cost production: The scoping study projects US$10/kg production costs, significantly below competitors. World-class economics underpin the potential for strong profit margins.
• Global HPA supply shortage: Rapidly increasing lithium-ion battery and LED demand means the HPA market is growing but underserved by current producers at under 30,000tpa capacity.
• Advantageous deposit: Unique salt lake with high-quality minerals requiring a simple, scalable processing method to produce 4N (99.99%) HPA. Lower capex and opex intensity versus hard rock developments.
• Strategic priorities aligned with commercialising: Accessing government grant funding and strategic partners or customers will be pivotal for Impact to realize a large project scope and promising upside.
• Attractive valuation: EV of ~A$50M offers discounted entry point. Similar stage peers Alpha HPA and FYI Resources are valued 5x and 10x higher.

Impact Minerals has announced encouraging results from initial economic studies of its Last Hope HPA project in Western Australia. Simple, low-cost production potential demonstrated by Impact could position the company competitively to help supply major growth in the global lithium-ion battery and LED markets. Realising commercial success still requires strong execution across several strategic priorities like process optimisation, feasibility studies and permitting over at least 18-24 months. However, Impact controls a Prime mineral deposit that, with disciplined development, can become a premier low-cost HPA supplier amid surging global demand.