About Kalbar Limited
Kalbar Limited (“Kalbar” or “Company”) is an unlisted Australian owned public company.
In 2013, Kalbar acquired the Gippsland Mineral Sands Project, 25kms northeast of the town of Bairnsdale in East Gippsland, Victoria, from Rio Tinto. This project included the very large Glenaladale mineral sands deposit.
The Glenaladale deposit was discovered in 2002 by Rio Tinto and was regarded as a significant titanium and zircon mineral sands discovery, notwithstanding at the time there were mineralogical problems to overcome to meet market specifications of individual mineral products before the deposit could be considered a commercial proposition.
The Glenaladale deposit resource currently stands at 2.74Bt @ 1.95% Heavy Mineral (“HM”) – globally 53.3mt of HM @ 82.4% valuable heavy mineral (“VHM”) containing 10.6Mt zircon, 7.3Mt rutile, 21.9Mt Ilmenite, 3.0Mt leucoxene, 0.85Mt monazite and 0.19Mt xenotime, making Glenaladale one of the largest undeveloped mineral sands deposits in the world.
Since then, through extensive drilling campaigns and advanced analysis methods, Kalbar geologists have discovered and defined a new, world class, high value ore body within the eastern portion of the Glenaladale deposit that is now the focus of economic development, the Fingerboards Mineral Sands Project (“Project”). This high value ore body has a current JORC 2012 measured total reserve estimate of 173Mt @ 5.0% HM (8.65Mt HM @ 86.8% VHM containing 2.14Mt zircon, 1.52Mt rutile, 3.09Mt Ilmenite, 0.41Mt leucoxene, 0.28Mt monazite and 0.06Mt xenotime).
Of importance is market specifications of product have changed in the last 7-10 years in Kalbar’s favour as China has become the largest consumer of premium zircon and rare earth minerals in the world. Multiple metallurgical programs have shown the successful production and marketability of the Fingerboards mineral sands products. Zircon now meets market specifications for a high value premium product as well as previously discounted monazite and xenotime as a source of now valuable heavy rare earths, Dy, Pr, Nd, Tb.
Feasibility studies revealed A$150 to 200 million of equity capital was required by the Company to bring this world class Project into production to unlock value for Kalbar shareholders. The Company explored various sources of equity funding to achieve Project production and determined that an equity partner in the Project providing a one-stop complete equity funding solution for the Project through to first production of HMC, best fulfilled the needs of the Company and its shareholders.
On 8 March 2020, Kalbar and its 100% owned subsidiary Kalbar Operations Pty Ltd (“KOPL”) entered into a binding Subscription and Shareholders Agreement (“SSA”) with ANRK B.V., an associated company of Appian Capital Advisory LLP (“Appian”) regarding a staged equity investment of up to A$164 million in KOPL by Appian to fund the Project. Appian is a long term, UK based metals and mining private equity investor, that has made a series of investments, worldwide in two mining funds (currently totalling ~US$1.8 billion) across high quality (1st/2nd cost quartile) projects in rare-earths, gold, copper, nickel and cobalt, and now minerals sands, and has successfully supported these projects through to production. Importantly, Appian has an experienced financial and technical team and a demonstrated history of working alongside the management teams of its portfolio companies to share development, financing, and operational expertise.
To facilitate the investment by Appian in KOPL, a Project Acquisition Agreement (“PAA”) between Kalbar and KOPL was also executed so that all of the assets (freehold land, tenements and staff) and liabilities of the Fingerboards Project were transferred from Kalbar to KOPL, the Project investment and operating vehicle of the joint venture parties. The SSA regulates both Appian’s investment in KOPL and the joint venture relationship of the parties. As KOPL has an independent management team that has been tasked by its shareholders, Kalbar and Appian, to bring the Fingerboards mineral sands project into production, effective from 1 May 2020, Kalbar became an investment holding company rather than an active hands-on operator, being the major passive shareholder in KOPL.
Kalbar is now in the enviable position of having its majority equity position in KOPL and inter alia the Project funded. Kalbar is expected to hold a ~54% equity interest on Project production with its current equity interest 81.3% at financial 2021 year end.
The KOPL website link www.kalbaroperations.com.au outlines KOPL and its progress to production. The Project will produce mineral sands heavy mineral concentrate (“HMC”) in a staged manner, initially 300,000-400,000 tpa and eventually up to 500,000-600,000 tpa. The HMC consists dominantly of the valuable economic minerals, ilmenite, zircon, rutile, leucoxene, monazite and xenotime. Some or all of the planned HMC production will be magnetically separated to produce a zircon-rich with minor amounts of rutile and rare-earth minerals Non-Magnetic (“Non-Mag’’) concentrate, and an ilmenite rare-earth minerals, monazite and xenotime, rich Magnetic (“Mag”) concentrate. These concentrates will be sold and shipped to mineral processors in China and Southeast Asia. There is also an option to sell HMC prior to magnetic separation.