ABR Boron Production Triples
Based on a recent press release from ABR on November 16th, 2021, Mining Weekly analysis finds ABR is set to triple production capability for the critical mineral boron at its Fort Cady operations in Southern California. Boron is becoming recognized as an essential mineral for use in multiple applications in decarbonization, advanced energy – batteries- and food security- as a micronutrient.
American Pacific Borates, listed on the Australian Stock Exchange (ASX: ABR), could triple the production of boron at Fort Cady, its California operations. The reason behind this is a rise in head grade and a newly announced mining strategy.
The Company informed shareholders on 15th November 2021 that the Boric Acid Head Grades At Fort Cady assumptions are now up, from 3.7%, according to bankable feasibility studies, to 5.1%. Additionally, the extraction ratio has increased from 70% to 88%, which means more orebodies can now be mined.
In response to these increased rates, American Pacific Borates has created a new mine for the Fort Cady Project. Thus, it has lowered the cut-off to 5% instead of 0%. This also has implications for the extraction of lithium and/or boron from the orebody.
Henri Tausch, the CEO, commented that the company had reached another critical milestone on its path to being an internationally recognized producer of Boron and Boron specialty advanced materials in America.
He added that the new mine plans confirm an increase in Boric Acid Head-grade and can mine all of the orebodies. This will produce more than 2.5 times as much boron as its definitive feasibility study estimated.
This is an excellent outcome considering that the company still has the opportunity to increase its exploration target area to the south and west of the existing orebody.
This latest announcement, combined with the recent 85% increase in the indicated and measured category for the resource, is a vote of confidence and a significant achievement for its upcoming US listing.
ABR Fort Cady project
Fort Cady accounts for more than US $80M of ABR’s total expenditures, including resource drilling and the metallurgical test works, well injection testing, permitting activities, and substantial pilot-scale tests.
During the initial stages, the project was planned to be a three-phase Project with a December 2018 DFS. This would have produced 408ktpa Boric Acid (“BA”) and 109ktpa Sulfate Of Potash (“SOP”) in total production.
The Company changed the project direction in January 2019 to allow for a low CAPEX starter program that divided the previously announced phase 1A into phases 2A and 1B. This arrangement provides greater flexibility for financing full production metrics, which remain the same as in the initial DFS. By April 2020, enhanced DFS will continue the work of the January 2019 starter project and incorporate value engineering.
The net result is a substantial increase in SOP production. Total SOP output at Fort Cady has increased to 363ktpa by 233% from 109ktpa. Boric acid production remains stable at 408ktpa. Phase 1A production, however, has grown by 50% to 8.2ktpa, an increase of 5.4ktpa.
ABR’s total financing was A$77M for Phase 1A in June 2020, and ABR was granted its final operational permit in August 2020.
ABR announced that Phase 1 was being deferred in May 2021 as it wants to provide Phase 1A in its entity. It is also exploring an option to move forward with the construction of Phase 2 with two base case options under consideration:
Option 1: Combining all Phase 1 operations in a 90kstpa boric acids and 80kstpa OP operation;
Option 2: A more extensive operation that combines option 1 with Phase 2 to deliver 270kstpa Boric Acid and 240kspa SoOP operation.
Research into Fort Cady resources
Duval Corporation undertook several surveys at Fort Cady in the late 1970s and the early 1980s, where it completed more than 30 diamond drill holes on which the maiden non-JORC estimate of the resource was made. For injection testing and pilot-scale operations, 17 more production wells were built in the following years.
Further, Mountain State Minerals has historical records that show borates production in 1987 and 1986. These operations created an average of 3.7% boric acid head grades without heating injection fluids, using recirculating pregnant liquid solution (PLS), or using residual boric acid-containing wastewater.
The historical records and analyses from essential supporting documentation support ABR’s strategic direction and validate its resources.
ABR – creating exceptional shareholder value
ABR’s responsibility to its stakeholders, partners and investors is taken seriously. Below are the strategies to enhance shareholder and stakeholder value for the long term.
ABR announced that Phase 1A Fort Cady Borate was deferred to make way for a US-based management team and US listing on NASDAQ (MQ22). This will allow Fort Cady to continue its development plan. This process has allowed the Company to refocus its efforts on high-end Boron and specialty products in a decarbonizing world.
ABR has begun testing on the head grade of the returning liquor. Heat may cause an increase in head grade (currently 3.7%) which could negatively impact the project’s economics (due JH22). A higher head level could significantly increase BA production (using eDFS plants design) or maintain the same overall production rates in Phase 3 at 408ktpa BA (+363ktpa sOP).
ABR is currently developing a commercial plant to produce 4ktpa BA in JH22 to target high-end specialty makers. Agronomy research and trials of SOP+B crops are ongoing by the Company.
Analyst snapshot on the ABR value proposition
The US may also be facing production/supply issues for BA or SOP. This is due to declining production at Rio Tinto Borates, which has fallen 4% in the JH21, and Compass Minerals plant nutrients segment. These segments are effectively cash flow negative. Supply is below assessment, which includes eDFS equity assumptions. Valuation rises to A$5.78 ps (from A$4.67ps on a fully-diluted basis).