McLaren VHMS in Western Australia already has an Indicated and Inferred JORC resource
Australian sand start-up Allup Silica (ASX: APS; FRA: U77) is reinventing itself. The company has secured a new flagship project on favorable terms and is shifting its focus from silica sands to titanium-bearing heavy mineral sands (VHMS). The advanced McLaren VHMS in Western Australia already has an Indicated and Inferred JORC resource (2012) of 280 million tons of 4.8% heavy mineral sands for 13.5 million tons of in-situ heavy minerals near surface. The main minerals are ilmenite, rutile, leucoxene and zircon. The mineral resource estimate is based on 653 AC drill holes drilled between 2009 and 2021. Metallurgical testing in 2017, conducted on a 14-tonne bulk sample, demonstrated that the ilmenite product is of suitable quality to be classified as sulphate-bearing ilmenite. The rutile and zircon produced are also of typical standard quality, with the zircon containing very small amounts of uranium + thorium according to a CSA report. It is estimated that changing previous owners have invested north of ten million in the project.
Allup will pay the vendors of the project, Westover Holdings Pty Ltd and Wild Side (WA) Pty Ltd, AUD 150,000 in cash for 100% of the exploration licenses. The vendors will also receive a 1.5% royalty. Allup will also issue 2 million options exercisable at 20c within 5 years of issue, subject to a bankable feasibility study and ilmenite concentrate sales in excess of US$500/t from the project. A further 4,241,571 shares are due upon completion of the Pre-Feasibility Study (PFS). A further 4,300,583 shares will be issued following completion of the PFS. In parallel with the acquisition, Allup is currently placing A$360,000 at A$0.04 to raise working capital and this placement is already fully subscribed.
Andrew Haythorpe, MD of Allup Silica, commented: “This project represents an excellent opportunity for Allup Silica to fulfill its plan to become a producing company. Although it is a different sand, the mining and washing processes for ilmenite are similar to silica sand, as is the near surface mineralization and low mining ratios. However, the higher product price and lower shipping volumes represent a compelling development opportunity. Given the work already completed and the increasingly higher value of titanium minerals, this opportunity offers a faster and more certain path forward for Allup Silica and its shareholders. The property is accessible at all times of the year, allowing for faster progress. Infill drilling and further metallurgical work is expected to commence as soon as possible so that we can complete a pre-feasibility study and progress to a bankable feasibility study for the project.”
The total project area is 333 square kilometers and is conveniently located 150 km east of the Norseman mining camp. Allup management sees significant potential for resource expansion at the project by incorporating results not included in the current expanded resource. Allup will advance the PFS and BFS for McLaren with infill drilling, metallurgical and mineralogical assessments to confirm the economics of the project.
Conclusion: Allup management is responding to changes in the market by shifting its focus to heavy mineral sands. Due to supply deficits and mine closures in Kenya, South Africa and Mozambique, experts expect demand for the titanium mineral ilmenite to remain strong. Due to the increasing scarcity of titanium, the price is significantly higher than that of international silicon dioxide, at more than US$ 300 per tonne. Allup is benefiting massively from the extensive investments made by its predecessors: the project already has a considerable resource and looks like it can be easily expanded. Importantly, extensive metallurgical studies have confirmed the suitability of the material. It is estimated that previous owners have already invested north of ten million in the project. Allup is now snapping up the project for the proverbial pennies on the dollar. This is a promising (new) start. The share price has already reacted with a plus of 16 percent, albeit with minimal turnover. Allup Silica went public on the Australian stock exchange two and a half years ago at a price of AUD 0.20. According to the most recent quarterly report, the company had AUD 1.18 million in cash at the end of June 2024. The current price of AUD 0.043 represents a market capitalization of just AUD 3.69 million.
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