Sand is not as abundant as the saying “like sand on the beach” suggests. When factors such as transportation and sustainability are considered, the number of economically viable deposits shrinks rapidly. This is especially true for high-purity quartz sands suitable for glass production or even as a precursor for PV modules. An exceptionally pure quartz sand resource with 99.66% purity has now been confirmed by the young Australian quartz sand explorer Allup Silica (ASX: APS; FRA: U77) on its Sparkler A project in Western Australia.
According to an independent study, the project contains 37 million inferred tonnes in the fine sand fraction (0.106mm – 0.6mm) with 99.66% SiO2 and minimal impurities of 0.02% (200ppm) Fe2O3. In the coarse sand fraction (+0.6 mm), an additional 25 million inferred tonnes with 99.67% SiO2 and 0.03% (300 ppm) Fe2O3 have been identified. The total resource is reported as 70 million inferred tonnes with 96.84% SiO2 and 0.34% (4100ppm) Fe2O3. The new resource estimate is based on recent metallurgical results from Sparkler A, published on May 16, 2022. Test work has shown that the finished product with a target sand fraction of 0.106mm-0.6mm is suitable for high-quality glass production. Metallurgical tests on four samples showed that magnetic separation achieved purities of 99.465% to 99.774% SiO2 and 80ppm to 290ppm Fe2O3.
The locations of the Sparkler Silica Sands exploration project are about 300 km south of Perth in the southwestern region of Western Australia. The Sparkler project comprises three granted exploration licenses. The region has well-established infrastructure that has been developed to benefit local industry, agriculture, and the community.
For testing purposes, a composite sample from four boreholes (UAC020, UAC021, UAC033, and UAC040) was submitted for metallurgical work conducted by Nagrom Laboratories in Perth. The initial test work included a size analysis followed by wet screening. Additional test work was performed on the sand fraction 0.106 mm – 0.6 mm. This consisted of an attrition analysis, heavy liquid separation (HLS), and magnetic separation.
Conclusion: Allup Silica has only been listed on the stock exchange since March of this year. The sand start-up raised AUD 5 million at the IPO price of AUD 0.20. Currently, the stock is trading – in line with the negative market sentiment – at half the IPO price (AUD 0.10). This corresponds to a market capitalization of just AUD 8.1 million (most of which is in the form of cash). At the moment, only a few shares are changing hands in the market. Therefore, the stock price is primarily a result of the illiquid market rather than a judgment on fair valuation. The current price level is just the price that risk capital providers paid pre-IPO at much higher risk! All other investors are currently deeply in the red. This also presents an opportunity. Although the prices of other quartz sand stocks in Australia have corrected, no company in the sector is currently valued as cheaply as Allup Silica. There’s a nice investor wisdom in English that says one should buy straw hats in winter. The market is undoubtedly in a winter phase. That’s precisely why we see Allup as a forward-looking investment in the coming sand shortage.
