Heavy Minerals Ltd: Royalty sold, offtake in place and share price tripled – tick!
Heavy Minerals Ltd Chairman Adam Schofield on 3AW, 2GB, 4BC & 6PR Bulls N' Bears Report
Listen to ASX-listed Heavy Minerals Ltd Chairman Adam Schofield talk to Matt Birney on the Bulls N’ Bears Report about Heavy Minerals Ltd’s rapidly advancing garnet project – a product that is sucked up worldwide largely by the US navy.
TO LISTEN TO THE HEAVY MINERALS AUDIO INTERVIEW - CLICK BELOW
Heavy Minerals is working on three industrial minerals projects where it is seeking to develop a supply of Garnet, Zircon, Rutile and Ilmenite. It has a project in Mozambique, the Red Hill project north of Geraldton and the Port Gregory project south of Kalbarri. The company has been busy lining up offtakers and royalty agreements for Port Gregory as it looks to get into garnet production – all of which has seen its share price triple in the last 6 weeks.
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 Limited, Adam Schofield
Matt Birney - Hi Adam
Adam Schofield - Hi Matt thanks for having us
Matt Birney - Okay so Heavy Minerals is working on three industrial minerals projects where it is seeking to develop a supply of Garnet, Zircon, Rutile and Ilmenite. It has a project in Mozambique, the Red Hill project north of Geraldton and the Port Gregory project south of Kalbarri. The company has been busy lining up offtakers and royalty agreements for Port Gregory as it looks to get into garnet production – all of which has seen its share price triple in the last 6 weeks.
Matt Birney - Okay Adam what's the existing resource at your Port Gregory project and what are the key minerals at that project?
Adam Schofield - Thanks Matt. Our resource is 166 million tonnes at 4 per cent total heavy mineral, 5.9 million tonnes of that is garnet and 260,000 tonnes of that is ilmenite.
Matt Birney - What's garnet used for and who typically buys it?
Adam Schofield - It's an industrial abrasive used in sand blasting and waterjet cutting. The largest consumer globally is the US Navy and the oil and gas industry is a very close second.
Matt Birney - You recently announced a curious funding agreement with a big WA trucking company, Campbell Transport who, as I understand it, will get repaid for their loan by way of royalties from the project once it gets into production. What are the key terms of that agreement?
Adam Schofield - Yeah thanks Matt, it's a sale of a royalty so we're selling 1 per cent of our gross revenue. We have the option to buy back 60 per cent of that royalty in 24 months and we've raised just over $2 million for that 1 per cent.
Matt Birney - How do you sell garnet? Is there a worldwide market or do you have off takes for it or what's the plan?
Adam Schofield - Effectively we wholesale in the jurisdictions we'll operate in and distribution networks are then sold into distribution.
Matt Birney - And do you have any off-take agreements in place?
Adam Schofield - We do. We have a off-take agreement for 10 per cent of our product in Australia with a well-known equipment manufacturer of sand blasting equipment.
Matt Birney - All right very quickly, I know you did a scoping study on this project back in 2022, that will likely be updated and changed in a PFS that you're working on. But what was the expected mine life and what was the free cash flow that you expect to get out of this project over that time?
Adam Schofield - Initially a 16 year mine life which should increase to 20 with our resource increase and 40 million free cash flow post tax on an annual basis.
Matt Birney - And when do you hope to get this project into production?
Adam Schofield - Within 24 months.
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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