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US uranium miner eyes $200m plunge into Astron Corporation critical minerals play

Updated: Mar 21

The owner of the only conventional uranium mill in the United States, Energy Fuels, is proposing to plunge $206 million into Astron Corporation’s Donald project in Victoria that boasts the biggest zircon deposit on the planet and a serious endowment of both light and heavy rare earth elements that is one of the largest outside of China.

Mining approvals are in place at the project and the definitive feasibility study just for phase one shows an after-tax NPV (net present value) of a whopping $852 million.

Astron Corporation drilling in Victoria.

Notably, the project that sits in Victoria’s Murray-Darling Basin about 250km north-west of Melbourne, is expected to spit out $3.87 billion in free cash during its initial contemplated mine life of 41.5 years – and that’s just for phase one.

ASX-listed Astron is now on the verge of pushing the button on its Donald project that is estimated to cost about $364 million to build, a figure the company says it can pay back in just 3.75 years.

In 2024, Astron is now poised, after more than a decade of preparation, to oversee the transition of the Donald Project. Astron Corporation managing director Tiger Brown

Importantly, the proposed investment by Energy Fuels – that is not yet binding – could potentially provide enough equity for Astron to borrow against to kick the project into production without flooding the market with shares. But that remains to be seen.

The deal is central to a memorandum of understanding (MoU) signed late last year between the parties that contemplates a joint venture (JV) that will see Energy Fuels pick up 49 per cent of the Donald project and the rights to the rare earths offtake from it. Astron will retain the right to pick up the heavy mineral concentrate offtake, in addition to holding 51 per cent of the project.

Under the terms of the deal, Energy Fuels will put up $180 million in cash and about $26 million worth of its shares, giving the Aussie rare earths and minerals sands developer exposure to uranium at a time when the heavy metal is white hot.

Phase one of the project shows seriously good margins, with the first five-year average annual revenue figure pegged at $348 million a year against an impressive earnings before interest, tax depreciation and amortisation (EBITDA) of $154 million a year. That will provide a significant buffer against unexpected product price fluctuations.

Astron says it has already pulled together some numbers around a contemplated “phase two” at the project that will see it go downstream in about 2030 with a mineral separation plant that will churn out a final zircon and titania product. Phase two, that Astron says will likely soak up a further $566 million in capex, will also involve a duplication of the phase-one mining and processing operations.

In a trend that seems to now be happening across several project studies, Astron says it won’t need to put its hand in its pocket for any of the expected $566 million capex to build phase two, as the cashflows from phase one will most likely fully fund it. The second phase is showing a 30 per cent internal rate of return (IRR).

Remarkably, Astron only has a miserly 146.5 million shares on issue, setting up a bit of knee-trembling anticipation about how the free cash that will flow from the expected $363 million annual EBITDA from the two combined phases might be distributed when the mine is fully operational. Perhaps even more remarkably, Astron is predicting the life-of-mine to push out to 58 years once phase two kicks in.

The extended mine life from phase two catapults the project NPV from $852 million post-tax from phase one to a whopping $2.2 billion post-tax from the combined two phases.

In 2024, Astron is now poised, after more than a decade of preparation, to oversee the transition of the Donald Rare Earths and Mineral Sands Project into a globally significant and major Australian mining and production operation at a critical time for global energy transition supply chain. Astron Corporation managing director Tiger Brown

The company says its project is made up of two adjoining deposits – the project’s namesake Donald deposit and the Jackson deposit. The total resource across both contiguous deposits is a whopping 2.63 billion tonnes grading 4.4 per cent heavy minerals (HM).

The Donald deposit is the more advanced and already boasts an 825-million-tonne resource going 4.5 per cent HM with 17.8 per cent zircon, 7.2 per cent rutile, 28.4 per cent ilmenite, 21.1 per cent leucoxene and 1.7 per cent monazite.

The Jackson deposit is immediately to the south of the Donald deposit and is not yet contemplated within the current mine plan. Jackson weighs in with an 823-million-tonne resource at 4.8 per cent HM, potentially providing additional longevity for the project – although with the current dual-phase mine plan sitting at 58 years, Astron may even have the luxury of leaving Jackson on the bench for a while.

As part of phase one, the proposed JV will mine 7.5 million tonnes of ore per year to produce about 200,000 to 250,000 tonnes per year of HM concentrate and about 7000 to 8000 tonnes per year of rare earths concentrate for 41.5 years.

As soon as practicable after kicking off phase one’s commercial production, the JV will look to double down on its ore production to mine 15 million tonnes per year and pump out about 400,000 to 500,000 tonnes of HM concentrate annually, in addition to 13,000 to 14,000 tonnes per year of rare earths concentrate.

Astron says the rare earths will be processed at Energy Fuels’ White Mesa facility in Utah, in what the company calls a “western rare earths supply chain”, which aligns with the Australian Government’s Critical Minerals Strategy and the US Inflation Reduction Act.

Management says it is also assessing options for HM concentrate processing at its own downstream facility in Yingkou in China and looking at other third-party offtake agreements.

While Astron is perhaps better known for its mineral sands background and the project boasts the biggest accumulation of high-value zircon on the planet, it will nonetheless be the rare earths that do the heavy financial lifting … at least initially.

Astron says the revenue split between rare earths and mineral sands during phase one of the project will be 58-42 in favour of rare earths.

Notably, while Donald contains the more traditional electric vehicle (EV) “light” rare earths, neodymium and praseodymium, it also contains the much harder to find and lucrative “heavy” rare earths, dysprosium and terbium, that are also a key part of the industrial magnets required for an EV engine.

Heavy rare earths such as dysprosium and terbium are really only mined in any significant quantity in China, which adds another unique element to Astron’s Donald project. The company is now steaming towards a final investment decision for the first phase at Donald and management has indicated that it expects to tick that box in September this year.

Mineral sand elements such as ilmenite, leucoxene and rutile are titanium minerals of varying grades.

The vast majority of titanium minerals are exported to pigment manufacturers where they are used for their white opacity in pigments for everyday items such as paint, ink and even toothpaste. Zircon is also used in ceramics for its opacity.

Rutile can be used to make lightweight, strong and corrosion-resistant titanium metal ideal for aircraft, space, defence, medical and sporting industries.

Astron is somewhat of an ASX veteran, having first listed on the ASX back in 1983 under the guidance of current managing director Tiger Brown’s late father, Alex. At that time, its core business was the sale of zirconium materials and chemical product processing in China.

The company continued to morph into various aspects of the zircon market over many years before picking up the Donald mineral sands project in 2004.

And Donald once again looks set to redefine Astron, which has turned its hand to many aspects of the mineral sands market over time. This time, however, it may well be different and on a whole new scale not seen before in the history of the $83 million market-capped company.

If everything goes according to plan, Donald could become a cash cow that throws off money for at least half a century – and lots of it. Execution however, particularly on the rare earths side, will be crucial and metallurgy and processing will be key.

One thing seems almost certain, however, and that is that Astron will likely get a chance to try its hand at mining and prove up its financial models as it has more boxes ticked than most at Donald.

Perhaps most importantly, however, is the fact that it has a big backer with deep pockets in Energy Fuels and that is often the crucial missing link for many projects that don’t quite make it off the study table.

In many ways, Astron’s Donald project has the best of both worlds. Its mineral sands can supply boring, but big and valuable markets for things like paint and ceramics and its rare earths gives it that element of blue sky that could become anything in a world that has become feverish about EVs.

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