Impact Minerals [ASX: IPT]
Metals & Mining
Poised to become the lowest-cost High Purity Alumina producer
Impact Minerals Limited (ASX: IPT) is an exploration company holding an extensive portfolio of tenements spanning 5,500km2 in mineral-rich regions across Australia, including Western Australia and the Broken Hill region. The company's flagship project, the Lake Hope High Purity Alumina (HPA) project, is situated in the Tier-1 jurisdiction of Western Australia. IPT aims to position itself as one of the lowest-cost producers of HPA, a critical mineral for the ongoing energy transition. IPT was listed on the ASX in November 2006.
Lake Hope to emerge as one of the most cost-effective producers of HPA
Lake Hope High Purity Alumina (HPA) Project is the centrepiece of IPT’s endeavours. The unique nature of the Lake Hope deposit allows for cost-effective and environmentally friendly quarrying rather than traditional mining. Combined with straightforward metallurgical processing, this provides a clear path to producing HPA products that can command high margins in a market forecasted to expand dramatically over the next decade. A scoping study on the project, released in November 2023, indicates that Lake Hope has the potential to become one of the lowest-cost producers of HPA globally, possibly by a margin of up to 50%. The company recently announced achieving the 99.99% HPA purity milestone using its proprietary Playa One sulphate process, reinforcing the results of its scoping study.
Presence across several high-grade mineral deposits
IPT is also actively exploring for precious and battery metals and has witnessed good progress in recent years. Exciting exploration results, especially in the Arkun-BeauJumbo project area, showcase the potential for Rare Earth Elements, Ni-Cu-PGM, and lithium pegmatites with drilling of some of the priority targets to begin in Q2 this year. Recent participation in the BHP Xplor program and a US$500k grant received under the programme support the company’s bona fides as an exploration company.
Valuation range of A$0.021–0.027 per share
We value IPT currently at A$0.021 per share in a base-case scenario and A$0.027 per share in a bull-case scenario using NPV-based valuation methodology. Our mid-point target price of A$0.024 represents a Price/NAV of 0.54x, offering substantial upside. Our calculation considers full share dilution, including the recently issued performance rights and unlisted options. Our target price range is solely based on the Lake Hope HPA project and does not include the value of the company’s other assets. We anticipate further significant additional value unlocking as the company is working on a Preliminary Feasibility Study (PFS) on the Lake Hope Project, expected to be completed by end-2024. A scoping study on the project demonstrated a potential NPV8 of A$1.3bn. Exploration is also in progress at its other projects. Key risks include commodity price fluctuations, funding challenges and potential project delays.