Heavy Minerals Limited: Is garnet the next big thing?
Heavy Minerals Limited Chairman Adam Schofield on 3AW, 2GB, 4BC & 6PR Bulls N' Bears Report
Listen to ASX-listed Heavy Minerals Limited Chairman Adam Schofield talk to Matt Birney on the Bulls N’ Bears Report about Heavy Minerals’ big garnet resource upgrade that caused its share price to almost quadruple!
TO LISTEN TO THE HEAVY MINERALS LIMITED AUDIO INTERVIEW - CLICK BELOW
Heavy Minerals Limited is an industrial garnet and mineral sands developer with three key projects – It has a minerals sands play in Mozambique, the garnet-rich Red Hill mineral sands project near Geraldton in WA and its flagship Port Gregory mineral sands project – also in WA near Geraldton and also garnet rich. Heavy Minerals' share price almost quadrupled recently after the company released an enlarged resource for its Port Gregory garnet-rich project and remarkably the company only has 54 million shares on issue.
RADIO INTERVIEW - TRANSCRIPT
Matt Birney - Welcome to Bulls N' Bears brought to you today by industrial minerals developer, Heavy Minerals Limited.
Matt Birney - ASX code: HVY
Matt Birney - I'm Matt Birney and I'm joined now by the Chairman of Heavy Minerals, Adam Schofield.
Matt Birney - Hi Adam.
Adam Schofield - Hi Matt.
Matt Birney - Good okay so Heavy Minerals is an industrial garnet and mineral sands developer with three key projects – It has a mineral sands play in Mozambique, the garnet-rich Red Hill mineral sands project near Geraldton in WA, and its flagship Port Gregory mineral sands project – also in WA, also near Geraldton and also garnet rich.
Matt Birney - Heavy Minerals' share price almost quadrupled recently after the company released an enlarged mineral resource for its Port Gregory project and remarkably the company only has about 54 million shares on issue.
Matt Birney - Okay Adam what was your resource estimate at Port Gregory near Geraldton before the recent upgrade and what is it now?
Adam Schofield - Thanks Matt. We had a resource of 135 million tonnes at 4 per cent total heavy minerals.
Adam Schofield - It included 4.9 million tonnes of garnet and the upgrade has taken us to 166 million tonnes at four per cent total heavy minerals. That includes 5.9 million tonnes of garnet so that's a 20 increase in our garnet resource.
Matt Birney - Does the resource still have legs in it or have you pretty much closed it off now?
Adam Schofield - Oh it absolutely has legs. We're still open to the south and to the north and potentially to the east.
Matt Birney - Now tell me, what exactly is garnet used for?
Adam Schofield - Garnet is primarily used in sandblasting and is also used in water jet cutting which is a preferred industrial cutting method globally.
Matt Birney - So there are any big operating mines in Australia and if so where?
Adam Schofield - There are. GMA who are a private operation next door to us. They're the biggest garnet producer globally and RDG with their Lucky Bay project is just to the north of us.
Matt Birney - What are the key drives of price and demand for garnet right now?
Adam Schofield - Availability and lack of, more specifically, there is a global shortage of garnets currently and major developments in the US around infrastructure, rebuilds and shipbuilding in general are driving demand.
Matt Birney - Now I know you've done a scoping study on this project, how much do you expect it to cost to build and what's the after-tax internal rate of return on that capital?
Adam Schofield - We're looking at 110 million dollars worth of capital at this point and a 33 per cent IRR at this point.
Matt Birney - How much money will it make a year? Let's go with free cash
Adam Schofield - 40 million dollars for 16 years.
Matt Birney - And what's the net present value of the project?
Adam Schofield - NPV of the project is 253 million at an eight per cent discount.
Matt Birney - How hard is it to fund projects like this? Can you get traditional bank finance for them?
Adam Schofield - You can but in our particular case we focused on the export fund of the Netherlands who we have a letter of support for funding and we're also going to be targeting the Australian exports fund equivalent.
Matt Birney - Adam Schofield from Heavy Minerals
Matt Birney - Thanks for joining me on Bulls N' Bears and remember we're only here to give you information, not advice, which you should of course seek independently.
Matt Birney - I'm Matt Birney and this is Bulls N' Bears
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