Overlooked Explorer Advancing "World's Lowest Cost" Battery Materials Project

• Impact Minerals recently acquired a high-purity alumina (HPA) project in Western Australia
• A scoping study shows the project could be a very low-cost HPA producer globally
• Test work is focused on optimising and scaling up the straightforward 5-stage process to produce 4N HPA
• Funding needs over the next couple of years seem manageable, but strategic partnerships will be key longer term
• Several potential upcoming catalysts, like securing off-take agreements, could significantly re-rate the company

Impact Minerals Ltd (ASX: IPT) is an exploration company that recently acquired a promising high-purity alumina (HPA) project in Western Australia. HPA is a niche but growing market supplying key components for lithium-ion batteries and LED lighting. In a March 2022 scoping study, Impact outlined the potential for the project to be one of the world’s lowest-cost HPA producers.

As managing director, Dr. Mike Jones explained, “A lot of what we thought when we first got into the project, that it's gonna be an extremely cost-effective producer of HPA, one of, if not probably the lowest cost producer of HPA globally."

If Impact can demonstrate at scale what they’ve shown so far, this little-known $40 million explorer could quickly become a coveted global supplier in lithium-ion and lighting supply chains.

HPA Market and Applications

For those less familiar with HPA, Dr. Jones provided a helpful overview:

“One of the principal uses, if you recall a few years ago, the Samsung phones were exploding. Probably used this analogy before, but the reason for that is that HPA is thermally and chemically inert, and so they use it as the separator between the anode and the cathode in lithium-ion batteries, but also increasingly in other battery architectures, basically to prevent the things exploding."

Besides battery separators, HPA is also widely used in LED lighting, from lightbulbs to advanced displays in phones, tablets and TVs. Dr. Jones noted both battery and lighting uses are forecast to see significant growth this decade. For instance, he pointed out that the US recently banned incandescent bulbs, driving the adoption of more efficient LED alternatives.

Unique, Straightforward Project

The Lake Hope project itself provides a unique advantage - situated at the surface of a salt lake, the intended mining area encompasses just the top 1-2 metres. As Dr. Jones described, “It's a free digging operation." The shallow evaporite minerals can then be stockpiled and fed into a simple 5-stage leaching plant located off-site.

So far Impact has focused on optimising this straightforward acid leaching method. Dr. Jones explained getting to 4N purity levels is key:

“By the end of the next quarter we're going to have... plenty of white powder such as the bag that I'm holding here which is High Purity Illumina. We do like to joke it's the second most expensive powder in Perth, but that is High Purity Allumina right there."

Delivering Samples to Strategic Partners

With the process advances so far, Impact's focus in 2023 is scaling up test work to generate product samples. As Dr. Jones stressed, “Building our product specification is a huge part of the playing field that we're getting into.” The aim is to attract strategic partners for qualification and securing off-take agreements.

Impact recognises the need to tread carefully here in light of recent geopolitical tensions. Dr. Jones said they are conscious of critical mineral security issues potentially affecting access to North American funding. He also noted most of the world’s lithium-ion batteries are currently made in China.

So the company plans to test interest in both battery separator and LED lighting applications to see which market is more receptive. As Dr. Jones summed up:

“These are very interesting challenges that we face in the marketplace over the next 12-24 months.”

Near-Term Funding Needs Manageable

In terms of funding test work and initial pilot efforts, Dr. Jones believes near-term needs are reasonable compared to feasibility studies for typical mining projects. He is also focused on securing government grants and incentives for domestic mineral processing.

For instance, Dr. Jones highlighted the Australian federal government recently introduced an A$2 billion critical minerals loan facility that could support a pilot plant.

The Investment Thesis for Impact Minerals

• Lake Hope scoping study shows potential to be a top-tier low-cost HPA project globally
• Straightforward mining and processing could ease the path to production vs peers
• Near-term catalysts around securing off-take agreements, growth in strategic partnerships
• Funding needs seem manageable, with additional support possible from government incentives
• Successful qualification testing in 2023 could significantly re-rate the company

With advanced HPA demand forecast to surge this decade, Impact Minerals appears positioned as a potential major new global supplier if they can demonstrate Lake Hope’s potential at scale in a qualification process over the next 12-24 months. Key catalysts around that test work, securing off-take agreements and strategic partners, could significantly transform the long-time explorer into an attractive investment opportunity in the HPA arena.