Andromeda Metals’ HPA Project Shows $1 Billion NPV and 69% IRR in Scoping Study

Innovative Technology Meets Market Demand

Andromeda Metals Limited (ASX – ADN) has released a comprehensive Scoping Study for its High Purity Alumina (HPA) Project, showcasing the commercial viability of its proprietary technology using the Great White kaolin feedstock. The study outlines a 10,000 tonnes per annum production facility in South Australia, designed to produce 4N grade HPA (99.99% purity) with a staged ramp-up over four years.

This development positions Andromeda as a potential global leader in low-cost, low-carbon HPA production, a critical mineral with growing strategic importance across Australia, the US, and Europe. The company’s novel process notably avoids the costly and environmentally intensive steps typical of incumbent methods, such as hydrochloric acid crystallisation and high-temperature calcination.

Robust Economics and Market Outlook

The financial metrics are compelling – a post-tax Net Present Value (NPV10) of AUD 1.01 billion, an Internal Rate of Return (IRR) of 69%, and a payback period of just 3.2 years. Capital expenditure is estimated at AUD 155 million, inclusive of a 30% contingency, translating to a capital intensity of USD 9,894 per tonne of HPA capacity; the lowest reported among comparable projects.

Operating costs are forecast at USD 3,020 per tonne, yielding an impressive 85% operating margin based on conservative pricing assumptions of USD 20,000 per tonne. These figures compare favourably against global peers and underscore the project's potential to disrupt the HPA market.

Market demand for HPA is expected to grow at a compound annual growth rate (CAGR) of 20%, with a significant supply shortfall projected by 2030. Andromeda’s timing aligns well with this forecast, aiming to capture market share as supply constraints tighten.

Environmental Edge and Strategic Location

Environmental considerations are central to Andromeda’s approach. The proprietary process reduces carbon dioxide emissions by approximately 48% compared to the traditional aluminium alkoxide process, emitting an estimated 6.47 tonnes of CO2 per tonne of HPA produced. This advantage is further enhanced by South Australia’s renewable energy leadership, with over 70% of electricity sourced from renewables in 2024 and a target of 100% net renewable energy by 2027.

Site selection is underway, with Whyalla and northern Adelaide identified as promising locations due to infrastructure, skilled workforce availability, and access to reticulated natural gas; a key input for the process. The project plans to leverage local water and power supplies, aiming for operational efficiency and sustainability.

Next Steps and Risks Ahead

With the Scoping Study completed, Andromeda plans to advance to pre-feasibility studies, continuous pilot plant operations, and marketing efforts to secure offtake partners. Approximately AUD 159 million in funding will be required to progress, with the company targeting a mix of equity, debt, and potential government incentives.

However, the project remains at an early stage, with inherent risks including funding availability, market price fluctuations, technical scalability, and regulatory approvals. The company acknowledges these uncertainties and cautions investors accordingly.

Nonetheless, the combination of strong economics, innovative low-carbon technology, and a growing critical minerals market presents a compelling opportunity for Andromeda Metals to carve out a significant position in the global HPA landscape.