Andromeda Metals delivers 65% NPV boost to $1 billion for Great White Project in DFS update; shares jump

Andromeda Metals Ltd (ASX:ADN) has opened higher on delivering a 65% increase in the net present value (NPV) of the world-class Great White Project (GWP) to reach $1.01 billion following a commercial review of the construction-ready South Australian kaolin project.

The results of the review, contained in an updated definitive feasibility study (DFS), also delivered a 59% higher average annual earnings before interest tax depreciation and amortisation (EBITDA) of $130 million.

This increase in the NPV has been attributed to the following:

• Escalating global prices driven by geopolitical uncertainties and supply shortages;
• Enhanced product composition and strategic partner portfolio;
• Recognising the high-value use of Andromeda's products in key market segments;
• Implementation of an updated mine development plan, supporting accelerated sales and reduced costs across the life of mine; and
• Improved weighted average product margin by 34% to $450 per tonne of product.

Investors have greeted the updated DFS positively, sending ADN shares 32.2% higher at the opening to $0.037.

Capitalising on core products

The commercial reassessment underlined the potential use of Andromeda's core kaolin products, Great White CRMTM and the Great White KCMTM 90, in established and burgeoning segments such as high-quality ceramic tiles and porcelain tableware.

Additionally, the emerging low-carbon concrete product market has been identified as another area where the Great White HRMTM, a complementary product, can be commercialised.

Meanwhile, the 2023 DFS identified the construction and infrastructure sectors as newly identified markets for the company’s industrial sand co-products to meet regional shortfall.

GWP's planned development stages.

Anticipating future growth

Pending additional funding, Andromeda envisions high-purity alumina (HPA) becoming an integral part of its complementary product portfolio.

It is estimated that $8-10 million will be required to complete a pre-feasibility study on HPA’s commercialisation although this was not included in the 2023 DFS.

Sustainable development

Andromeda remains dedicated to the sustainable development of its operations, adopting a low-impact approach to mining and processing over the course of the GWP’s lifespan as well as maintaining transparent consultation with stakeholders, including First Nations and local communities.

“The 2023 DFS represents the outcome of a rigorous commercial and business strategy review for commercialising our construction-ready project, to meet rising market demand,” Andromeda chief executive officer and managing director Bob Katsiouleris said.

“As we move to finalising debt funding, the 2023 DFS will underpin our funding strategy for the remaining capital required to move towards anticipated construction and into production.”

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