Monsters of Rock: The Alpha of HPA and gold deals as little miners emerge on the radar

Alpha HPA sanctions construction of $550 million Gov-backed Queensland plant
Black Cat to process Kalgoorlie dirt through Paddington gold plant
Gold miners lift with ASX materials on a high

It was a day for the little guys in the ASX materials sector with new mines being sanctioned across the country.

The big move was in Queensland, where Alpha HPA (ASX:A4N) became the first Australian miner to approve a commercial high purity alumina project to compete with incumbents in China and Japan.

Backed by Orica (ASX:ORI) and supported by $320 million in Federal Government loans, its Gladstone plant will be the largest standalone HPA facility in the world, producing 10,000tpa annually.

The material is crucial as a separator in NCM cathode lithium-ion batteries and sapphire glass used in LED lights.

It’s a small market, but one which currently has a high barrier to entry since it is largely derived in expensive and chemically intensive processes from aluminium metal.

READ: The secret recipe that could make Impact Minerals HPA’s Michelin Star chef

Alpha HPA will instead use industrial feedstock as its feedstock at Yarwun, where a pilot scale plant is in operation.

Along with the $320m debt facility, Alpha will also require an $80m cost overrun facility and $120m equity raising led by Bell Potter and Macquarie to fund the construction of the Stage Two project, along with a share purchase plan.

The $933 million company expects to be in production by the first half of FY27, generating $255-403m a year in EBITDA at unit cash costs of US$6.70/kg.

Capex, including a $79m contingency, will come in at $553m, though based on the recent history of critical minerals projects, that number can hardly be viewed as set in stone.

Its equity raising will come in at 90c per share, a 10% discount to the current A4N share price of $1.

Alpha HPA (ASX:A4N) share price today

Golden boys

Over in the West a more modest outlay will bring Australia’s newest gold miner to life, with Black Cat Syndicate (ASX:BC8) expecting to be in production by September at its Kalgoorlie East gold project.

While its larger Paulsens and Coyote mines, where the company has its own mothballed processing facilities, are further down the line, Kal East will initially be developed through toll treatment.

850,000t of open pit ore will be sold over the next 18 months to Zijin Mining’s Norton Goldfields and its Paddington plant north of Kalgoorlie.

The deal will involve the processing of open pit reserves at Black Cat’s Myhree and Boundary deposits, which boast 46,000oz at 2.4g/t and 6000oz at 1.5g/t respectively.

An underground resource of 105,000oz at 4g/t has been excluded, with mining to be undertaken by ‘turnkey’ provide Mineral Mining Services.

Once they’ve recouped their costs, Black Cat will get the first $30m of cash flows before sharing the profits with its contractor.

Black Cat says the project, which is being announced with gold prices in excess of $3600/oz, could be used to help fund longer term developments at Coyote and/or Kal East.

“These arrangements provide a turn-key solution to fund and operate Kal East’s Myhree and Boundary open pits. This enables Black Cat to maintain focus on the Paulsens restart, while receiving cashflow from a second production front at Kal East,” BC8 MD Gareth Solly said.

“The profit share arrangement incentivises both parties to deliver the best possible result, with Black Cat to receive the first $30M in cashflow after the recovery of start-up costs.

“We are looking forward to working with Mineral Mining Services and Paddington Gold on the mine development, haulage and processing of Ore from the Myhree and Boundary open pits.

“With both Paulsens and Kal East nearing operation, we are well on our way to being rerated from an explorer to a producer.”

BC8 had suspended plans to develop a new processing plant at Kal East a couple years ago as capex costs for new builds soared.

Black Cat Syndicate (ASX:BC8) share price today

Materials higher with goldies on top

The materials sector rose almost 2% today, with gold miners out front, battery metals and iron ore close behind.

It followed a stunning session for commodities on Friday, with copper up 2.3% to US$10,668/t, nickel rising 6.5% to US$21,080/t, gold up 1.4% to more than US$2400/oz, silver at long term highs of US$31.50/oz and zinc above US$3000/oz.

Supply disruptions and Beijing property support were among the reasons behind the run.

Many of the top performers were goldies, with the ASX All Ords Gold Sub-index up 3.58%.The sub-index is now trading at levels not seen since late 2020.

New Hope Corp rose on its April quarterly results, announcing a 20.7% increase in saleable coal production to 2.5Mt and 20.8% increase in coal sales to 2.4Mt.

Bengalla cut its costs by 7.8% to $73.4/t on among some of the NSW mine’s highest sales months in history – a margin of $106/t – with underlying EBITDA up 21.6% to $218.8m and New Acland guidance increased for the year from 660,000t to 800,000t after NHC picked up additional rail capacity.

Core Lithium sunk 6% after Paul Brown, who recently left rare earths producer Hastings because it was cutting costs to hibernate for higher prices, emerged as the Darwin lithium producer’s CEO.

Core itself parted ways with old CEO Gareth Manderson as tumbling lithium prices forced it to cut costs and end mining activities at its Finniss project.