Allup secures key piece for WA mineral sands PFS puzzle

Allup Silica has secured the services of a leading international mining consultant to conduct a prefeasibility study (PFS) on its at-surface McLaren heavy minerals (HM) project outside of Norseman in Western Australia.

The company has today confirmed that it has engaged Queensland-based IHC Mining for the PFS work less than a month after it acquired the advanced-stage project that boasts an impressive 280 million-tonne resource grading 4.8 per cent HM. It also comes at a time when the deposit’s key ingredient ilmenite – the main source of titanium oxide, which is used primarily for white pigment – continues to trade at an impressive US$300 (AU$443) per tonne.

IHC Mining is a division of widely-respected global consultant, Royal IHC. It is a design, engineering, construction and consultancy company with more than a century worth of experience in multi-commodity mining, including in mineral sands.

While process optimisation at McLaren is likely to continue following the completion of upcoming further metallurgical testwork, Allup says IHC has already kicked off flow sheet development and basic engineering. The company is focusing on a medium-sized, 10 million tonnes per annum spiral concentration plant, which could produce up to 400,000tpa of ilmenite in concentrate.

Allup appears well-positioned to take advantage of looming global titanium shortages that are expected to see strong ilmenite market demand continue due to supply deficits and mine closures throughout Africa.

The McLaren project, which has excellent road and rail access to the Port of Esperance and has had nearly $13 million spent on it to date, was fully acquired by Allup for just $150,000 and share entitlements upon feasibility milestones being reached earlier this month.

The PFS conditions for shares to be issued to the vendors include a capital expenditure of no more than $110 million, an operating expense of less than $215 a tonne of concentrate and a pre-tax net present value (NPV) of more than $800 million. They are impressive figures for a bargain-basement project now owned by a company with a market cap of just $3.75 million.

In total, 653 air core holes were drilled into McLaren between 2009 and 2021, with the mineralisation being hosted in relatively free-flowing red-orange sand. Management says what makes the deposit so interesting, is that because it starts at surface, the project has a low strip ratio that leads to less up-front costs and ultimately makes it more environmentally friendly to mine.

Metallurgical work was historically done on a substantial 14-tonne sand sample in 2017. The sample identified sulphate-grade ilmenite and produced typical-quality rutile and zircon with low levels of uranium and thorium.

Allup plans to soon launch an infill drilling campaign designed to upgrade its resource to a measured and indicated classification. It will also conduct further metallurgical work in conjunction with its PFS, which is expected to be completed within 18 months.

The company’s new leadership team led by managing director Simon Finnis knows a thing or two about mineral sands projects and development, having been responsible for the initial 1970s discovery of the historic Allied Eneabba minerals sands deposit, 300km north of Perth.

The McLaren project appears to have been a bargain buy for Allup, which will now work to prove to the market that its PFS numbers can stack up to the billing. If ilmenite can continue at its historic high prices as the infrastructure-rich McLaren story continues to unfold, the company could just make the market sit up and take notice when the PFS is revealed.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au