Yes, welcome back, everyone. So happy to have Impact Minerals Limited. They trade on the ASX under the symbol IPT, and it's driven by a commitment to excellence and a vision to harness Australia's mineral wealth. It's establishing itself as a key player in the HPA industry through careful project selection, rigorous evaluation, and profitability focus, while aiming to create lasting value for shareholders while contributing to the sustainable growth of the mining sector. Happy to welcome Managing Director, Mike Jones. Welcome to the conference, Mike. Nice to see you. The floor is yours.
Okay, thank you very much, everyone, and thanks for being here to listen to the Impact story. I'm not sure if the audience is aware, but in the last week, there's a company in North America, in the U.S., they're called MP Materials. Two significant things have happened there. The Pentagon has invested $400 million into the company, and as recently as yesterday, Apple announced that they had done a $500 million offtake deal for their rare earth magnets that they produce over the next five years or so. That is a fantastic outcome for what have become known as critical minerals. You might have heard that phrase, but critical minerals are a key part of the whole supply chain, and obviously the U.S.A. is very concerned about securing supplies of numerous metals, minerals, as we move forward into what can only be described as uncertain times.
Today I'd like to introduce you to another critical mineral, high-purity alumina. It's a little known but niche mineral that's a very crucial part of the energy transition that we're going through. It's a crucial part of many high-tech businesses, and we'll talk about that today. This picture here is of a salt lake. We call it the Magic Lake here. It's about 500 km east of Perth in Western Australia, which is where I am right now. Believe it or not, in the top two meters of that salt lake there, there is something in the order of about $15 billion worth of high-purity alumina. We are going to basically dig up that clay, that mud that's sitting there, and we're going to take it to Perth, where we are going to put it through a pilot plant that we've also recently purchased and convert it into high-purity alumina.
At the moment, we've got 80% interest in the lake, and we've recently purchased a major shareholding in a pilot plant to produce high-purity alumina at scale. That is located also here in Perth and actually came from the assets of one of our competitors in the space that went into administration. It went into administration because of financial mismanagement rather than any issues with the technical process that they have. Basically, we're looking to take that mud, put it through this plant that you can see here, and convert it into this. Probably most of you being in North America will be familiar with that this is actually the Las Vegas Dome. The Las Vegas Dome is covered in about 1.8 million light-emitting diodes, or LEDs. Virtually every other light that you see there is also an LED.
LEDs are going into almost every piece of electronics that's being produced globally. Behind every piece of LED is a small wafer of sapphire, which is a form of high-purity alumina. We believe that with our Magic Lake in Western Australia and our newly acquired pilot plant, we are going to be able to transform the production of high-purity alumina and be the lowest cost producer of that critical mineral globally. We've talked about LEDs. What else is high-purity alumina useful for? Once you've formed high-purity alumina, you can convert it into sapphire. Most of you will be familiar with sapphire and the blue color. That's because it has impurities, but when it's perfectly pure, it's actually see-through. It's used in a wide variety of sapphire glass. Most of you have probably expensive watches with sapphire glass on the top of them.
Many of the handheld iPhones and other phones have got sapphire glass on them, and it's being used in an increasing number of high-tech businesses, lenses, and defense applications. Very importantly, it's actually also now being used in semiconductors. Obviously, the growth of semiconductors is going exponential, and high-purity alumina is used in a couple of places in those semiconductors. It's actually used to help polish some of the particles, in fact, silicon carbide, parts of semiconductors. That's because high-purity alumina is thermally inert, chemically inert, and one of the hardest substances known to mankind. That, of course, is growing at an exponential rate with all the AI data centers that have been putting in. We know for a fact that semiconductor end users are coming for HPA in a big way. Finally, it's actually used increasingly now in electric vehicles.
I mentioned that HPA was thermally inert and chemically inert. What happens is that it's used in lithium-ion batteries to help separate the anode and the cathode. It allows chemistry to pass through, but not the heat, and it stops those batteries exploding. I'm sure we've all seen pictures of Tesla cars catching on fire, and HPA is used to prevent that. If the battery is not made properly, if the separator is not made properly, not doing its job, you get this thermal runaway, and hence those batteries catch on fire. You can imagine then with LEDs, lithium-ion batteries, and semiconductors that we're seeing amazing growth in the use of HPA. This is a very straightforward, simple supply and demand curve. We've got demand on the top in the blues, and it's been growing at about 20% compound annual growth rate.
That's a huge growth in any market, and HPA in particular is now being taken up at an increasing rate across all of those industries. However, the issue we have is that it's actually quite difficult to make high-purity materials. In the bar charts, we're seeing the supply, and we can see that basically there's an emerging supply deficit in around about 2026, 2027, only one or two short years away. At that point, we're seeing a potential significant price increase. That is about the time that we believe that we can start producing HPA at scale from our Australian deposits. Now, why would we want to be in the high-purity alumina space? It's actually a very high-value business. What we see here are different grades of alumina.
We have smelter-grade alumina, which comes out of the process that's produced aluminum metal, or alumina metal, as you call it in North America. Then you can purify it to different degrees. The benchmark is actually what we call 4Ns or 4Nines, which is 99.99% pure aluminum. It means it's only got 100 parts per million of impurities within it. You can purify it even more to 5N and ultra-pure material at 6N. Those command incredibly high prices per ton of HPA. If we're looking at 4N and 3N, that's where the bulk of the market is. We're looking at prices sort of between $5,000 and $30,000. We're focused on the 4N market. That's where most of the volume is. It's where our high margins are, and it's where you can build a business.
If you go for the 5N and 6N, that's more like cream on the top of everything because you can get incredibly high-value sales for that, $30,000- $50,000 per ton for some of those contracts. However, there's not a lot of volume there. That really is the cream on the top. We're very focused on that 4N market moving forwards. The question would be, how much alumina do we have? Alumina is aluminum oxide, Al2O3. In that lake that I showed you, we've got at least 450,000 tons of alumina. We're looking to produce only 10,000 tons per annum. That gives us a multi-decade mine life. We've got over 40 years of mine life just from that lake alone.
Recently, we put out what we call a reserve, which means we've done all the feasibility studies and the economic studies to demonstrate that this material is going to be economic as we bring it into production over the next couple of years. This is actually what it looks like. This is where the story perhaps gets slightly unbelievable. This is how we drilled out $15 billion worth of HPA. This is the gentleman that found the deposit originally. We have a rubber mallet and a plastic push tube. This is very unlike any other drill program you've seen on a resource deposit anywhere in the world. You basically hammer the tube into the dirt. It's only about two meters deep. This is what it comes out looking like. That entire program only cost us about $100,000 to do.
When you consider we created $15 billion of in-ground value, that's about the best result on a drill program you're ever going to get in the entire mining industry. The material comes out looking like this. It's naturally incredibly fine-grained. The particles in there are only microns and nanometers sized. As a result, we don't need to do anything to it on site. We don't need to crush it. We don't need to grind it. There's no need for any blasting, crushing, or grinding on site. Our plan is very simple. We're going to dig up the clay, and we're going to transport it offsite to Perth, where we will process it. As a result, the environmental footprint on this small mine is going to be the lowest environmental footprint and virtually no long-term environmental liability.
We're only going to leave a hole about one meter deep across the entire lake. Our plan is very simple. This is a map of the lake in through here. That's about 1 km from left to right as you're looking at it. In the purple colors there, we see very high-grade alumina. It's about 27%. Our plan is very simple. We are going to drive it off the side of the lake for three months of the year. When the lake is dry, it's easy to mine. We're going to stockpile the material on the side of the lake, and we're going to then transport it to Perth about 500 km away. When you're starting a mine, there are two very important things you need to consider. The first one is the rights of the First Nations people. In that case, that's our Aboriginal group. They're called the Naju.
They're based in the nearest town. They're very pro-mining. We've already completed what we call the heritage survey over the surface of the lake to ensure there are no impediments to mining from an Aboriginal point of view. This is their symbol. It's a tree growing upwards and downwards into the ground. They're actually very pro-mining. We're in discussions with them to come to an agreement as to how their community can benefit from this mine that we're going to build there. The second thing is the environmental surveys. These lakes can be very delicate environmental areas, but we've already completed baseline environmental surveys. Again, no threatened species. There's no impediments to mining here. We're basically cleared for mining, subject to us getting a grant of a mining lease from the West Australian Department of Mines.
That should come as a matter of due course over the next 12 months-1 8 months. This is actually where we are. As I mentioned, we're about 500 km east of here in Perth. Our plan, as I mentioned, is very simple. We're going to dig up the material, basically stick it on a truck, and drive it into Perth all year round. It's about 550 km, but we can get that material to Perth for only about AUD 170, which is about $120 per ton of HPA. Minimal cost when you consider that our average sale price is going to be north of $25,000 per ton. We have ready access to reagents there, and we have ready access to a skilled workforce. It's a no-brainer. Western Australia is also one of the best places in the world to work.
It's very secure, and it's what we call a tier one jurisdiction for mining. We've just completed what we call the pre-feasibility study, which is basically our first detailed look at the economics of the project. We call it a bit of a jigsaw puzzle because we have things happening at the mine, like I mentioned, the surveys with the local Aboriginal group, environmental surveys. We've also done all the engineering work on a process plant to actually scale up to a benchmark production rate of 10,000 tons per annum of HPA. That's actually a relatively small amount when you consider, say, for example, the iron ore industry, which produces millions of tons per year. We're only going to produce 10,000 tons per annum of that very high-value product. We have a husband and wife team, Scott and Eugenia Fegan. They are experts in alumina.
They've worked for Alcoa, a well-known U.S. alumina company, for 50 years between them. They have a lot of skills in high-purity materials, and they're in control of designing our process plant and also our test work. We've recently employed a Marketing Manager to establish our initial contacts with the end users and all the specifications that they will need for us to provide to them as we produce our HPA. The significant outcomes of our pre-feasibility are this. We have a net present value for the entire project that is just over AUD 1 billion. If you include a byproduct credit, it's about AUD 1.5 billion. That's about almost $1 billion US dollars at today's exchange rate. It's a fantastic project. The significant thing in this graph that I'm showing here is we've kind of jumped into the future. This is what we call a cost curve analysis.
On the right-hand side of that graph, we see the incumbent producers, which are predominantly the Chinese and the Japanese. They're producing their HPA at a cost of somewhere between, say, $12,000 and $20,000 US dollars per ton. There are some new entrants, one new entrant in particular in Australia, that's building a 10,000-ton per annum plant, which is what we aspire to produce. That's Alpha HPA, they're called, and their code is A4N on the Australian Stock Exchange. Their input costs are about $8,000 US dollars per ton. We believe that we can produce our HPA at $4,500 a ton if you include byproducts, and we will produce a very valuable fertilizer byproduct as part of our process. As a result, we believe that we're going to be the lowest cost producer globally of HPA by a very significant margin of up to 30%.
However, we've learned a lot of things about high-purity alumina on the Lake Hope journey. It turns out that making high-purity materials of any sort, whether it's manganese or graphite, is actually quite difficult. That is a great thing because if you can get around the barriers to entry for producing HPA, it means you've created a moat around your business, which makes it very difficult for other players to get into the market. That means that you can be a big player in a small space. It gives you pricing control, and that's exactly where you want to be. If you're for any initial project that you have, it's just generally difficult to make high-purity. You need the right process to get to your 4N, 5N, and 6N.
Second thing, I won't dwell on this, but it's important you have your own laboratory to get instant turnaround when you have your pilot plant. When you're moving forward, you need instant turnaround to be able to adjust your machinery and your pilot plant. If you have to wait two, four, six, eight weeks, which you would do through a commercial laboratory, it just takes too long. There's also issues with reagents. You have to be able to recycle those. I won't dwell on that today. The important thing here is that clients won't take you seriously until you've got at least a pilot plant. Because of the high spec and the high end use of the high-purity alumina, clients want to be sure that you're there for the long term before they switch supplier or enter a new contract with you.
They won't take you seriously until you have a pilot plant. Finally, this is an industrial mineral. There's always a challenge in industrial minerals between scaling up, between your offtake agreements, which guarantee you your income, and the ability to raise debt to finance the actual scale-up. You've got to go through all of those barriers to get to a successful HPA business. I'm pleased to say that we believe that we've got through all of those barriers and we're on our way to getting through them. I'll show you how that is going to happen moving forward from here. In terms of the purity, last year we announced that we had received a federal government grant of about AUD 2.9 million . It's a three-way partnership between ourselves, our engineering company, and also a university here in Perth called Edith Cowan University.
We've started the collaboration with them underneath the grant. Our aim is to construct and help the development of a pilot plant based around membrane technology. Membrane technology has been used for decades in the water industry. Edith Cowan University here in Perth has world-class membrane experts and researchers, and they're bringing that technology into the mining space. I can tell you firsthand that they're starting to revolutionize the processing of a number of different metals and minerals. In particular, they've made some significant breakthroughs in lithium, which you've no doubt heard about, and rubidium. Alumina, with Impact, is going to be next on the list. We're basing all of this work around producing sustainable, low-carbon, low-energy HPA. It's going to form the basis of our definitive feasibility study, which is basically now underway.
I have huge hopes that this technology is going to revolutionize what we're doing, and it has applications across a much broader area of high-purity minerals, including manganese, silica, and iron, as I've mentioned previously. I mentioned that we'd recently acquired a particular process with a pilot plant. The process is called HiPurA. We paid $2.2 million in concert with a couple of other groups. We have a 50% shareholding in it. What have we got for our money? We believe that what we have is a bolt-on. We believe that we can take the material from Lake Hope and push it through this particular process to get to our HPA at an even cheaper cost than what we've already demonstrated that we can do in our pre-feasibility study. It's a hugely exciting development. We've only acquired this asset in late April.
We took possession of the building on 1st of May , and we're turning it on at the moment. We hope to have some HPA in our hands within the next couple of weeks. It's a very exciting time for us. We've purchased a fully functional high-purity laboratory. Remember, I mentioned it's important that you have a quick turnaround. They've got $1 million worth of equipment here. That is now all being fired up. We're going to be able to turn around our assays in this pilot plant within hours rather than weeks. It's hard to describe the significant technical advantage of that. This is what the material looks like on the right-hand side. Each of those vials there is a different experiment that's been run to produce high-purity alumina. We've also acquired a pilot plant, which is capable of producing probably about 25 tons per annum, also in Perth.
It's a brand spanking new pilot plant. It was about 90% commissioned when the company went into administration. It's been built very beautifully to high specifications. At the moment, we turned the plant on. We're getting all the commissioning problems ironed out, and we should be in a position to produce at least modest amounts of HPA, as I mentioned, within the next couple of weeks. Whilst it's slated to produce 25 tons per annum, we believe that that facility can be expanded even within the same factory warehouse that's being leased to produce about 100 + tons a year of HPA, which is enough to get us into basically semi-commercial production and considering and working out how we're going to scale up from that position. The biggest thing we've purchased is time. I won't dwell on this, is the fact that Impact , we've been doing a pre-feasibility study.
We're still short of a pilot plant and have quite a few years to go before getting to that stage. What I've shown here is just different companies that have been in the HPA space. Most of them have failed because of those issues that I was talking about, all the high barriers to entry. Impact was really only in this position doing test work and looking to get to a small market plant and move on from there. It's at least two years from there to get to a pilot plant and then a commercial plant. The company I mentioned previously, Alpha HPA, they have $1 billion market cap, by the way, which I'm going to talk about. They're scaling up from their pilot plant to a commercial plant of 10,000 tons per annum as we speak. The big thing that we bought is two years.
We've probably saved at least $6 million in overheads. We bought ourselves two years in time. We now have a pilot plant. We're ready to turn it on, and we can scale up to a few hundred tons per annum. We've leapfrogged everybody else. We only started in the HPA game two years ago. We've now overtaken everybody else, but Alpha HPA, this is a game changer for us. We're now, you cannot help but consider us as a serious player in the HPA space. Lastly, we're looking at a modular business model. One of the great things about the HiPurA process is that we believe it can be scaled up incrementally in, say, 1,000 ton- 2,000 ton per annum increments. That's hugely significant.
It means our capital requirements are in the tens of millions of dollars, not in the hundreds of millions of dollars, which it would take for us to scale up in one hit to 10,000 tons per annum of production. This is, again, an absolute game-changer process. We believe that by bolting on our Lake Hope project, we're going to be able to produce HPA at a vastly considerable lower cost than anybody else globally. Our aim is very simple. We're going to expand from Australia to the world. We already have patents granted in a number of places, Southeast Asia, and we're looking to get the U.S. patent granted very, very shortly. It's a big step for us. The significant thing about being able to build modular is that we can build small plants anywhere in the world and ship our material to it and produce HPA.
We've had a lot of interest from some of the downstream users to actually get involved in those plants and help us build them. Our big plan, of course, is to actually build the plant in North America and look to list on the NASDAQ in the next couple of years. The forward plan over the next couple of years is very simple, very straightforward. Right now, we're turning the plant, finishing the plant, commissioning it, and turning it on. We're going to get it up and running. It's going to take us till the end of the year to iron out all of the commissioning problems. There's no plant in the world, a process plant that's ever been turned on and run smoothly from day one. We're giving ourselves a good runway to get up to scratch. At that point, we'll be able to produce HPA of consistent quality.
Then we can start our serious engagement with the customers, looking for offtakes, letters of intent to build up demand. We hope to get at least initial offtake agreements sometime in 2026. We will also look at the economics of scaling up that pilot plant to the larger scale plant, whatever size that is, 1,000 tons-2,000 tons per annum. Our next base is going to be in North America. We're very keen to establish a pilot facility and maybe a larger facility somewhere in North America where we have access to capital, access to cheap power, particularly hydroelectric power, and basically then scale up to thousands of tons per annum by 2027. If you recall, that's when we believe there's going to be a tightening of supply and an increase in the end product price. It's a very exciting development time for us.
We have a very clear runway, a very clear business path, and we've got some significant milestones that are very clear that we're going to look to tick off. I'll tell you just a little bit about the company. We've been listed for some time. We have been an exploration company. We always wanted to find a world-class deposit and bring it into production. The economics around our Lake Hope project are certainly world-class with an NPV of $1 billion and the lowest operating cost in the world. That's world-class by anybody's standard. Currently, our market capitalization is about AUD 25 million-AUD 30 million . We have a low share price. This is a great time to get in. We've been certainly affected by a lot of the downturn in the mining industry late last year. Now, pre-feasibility study is out. We have a lot of interest.
We're getting a lot of volume, a lot of buying at these low prices. We're incredibly well supported by two German shareholders in particular. We have a family office that's based in Düsseldorf and the listed investment company in Frankfurt. They own nearly 25% of the company between them. They have contributed to all the capital raises that we have done since we got the Lake Hope project just two short years ago. We're currently well funded, and going forward, we're going to get the pilot plant into production, and then we'll be looking at a capital raise, of course, at some time in the future before we're moving into production. Now, just to finish off with, I just wanted to talk about where we might be able to go with that from our current market cap of $20 million- $30 million.
I mentioned that we have an NPV, which is the net present value. In theory, our project's worth $1 billion in the ground right now. There's a big disconnect. There's a 50 x uplift potentially there. A company that I've mentioned, Alpha HPA, they're the only company globally that's now in a position to scale up to 10,000 tons per annum, apart from Impact Minerals, as we will show over the next few years. Their journey's been a little bit extended. They should be at about 10,000 tons per annum production by 2027. They've been going eight years already, but in that time, their market cap has gone from $20 million to $1 billion. They've done that 50 x uplift. We believe that we're on the same journey. That potential is there. You should definitely get on the journey. People then ask us, what about the clients? What's going on?
All I can say is that Alpha is producing, sorry, building a plant for 10,000 tons per annum production. They've indicated that they've had indicative demand of over 30,000 tons per annum. There is absolutely no doubt that demand is there, and we're going to be able to fill that demand or help fill it over the next couple of years. It is definitely a journey that you should be on with us. Just to finish with, we aim to be one of the lowest cost producers of HPA globally. We have a unique deposit in a tier one jurisdiction in Western Australia. We have an industry-disruptive metallurgical process, and we are rapidly building out our capabilities now in metallurgy and the final product specification in order to engage with those customers and bring them on board.
We believe that our timing is going to be right. We are going to deliver into this high-margin growth market with huge upside potential in the next couple of years. I would invite you to come along on that journey with Impact Minerals. Thank you very much for listening to me. If you have any questions, I will be here to answer them. I look forward to continuing our conversation with you. Thanks very much.
Wonderful. Thank you so much. We do have some questions for you in just a little bit of time. Can you give us a little quick overview? Xander wants to know a little bit more about the market for alumina. If you can talk a little bit more about that, where it's mostly used.
Yeah, sure. To give you the quick overview, LEDs, as I mentioned, behind every piece of LED is a small piece of sapphire, which is the form of alumina. It's used in ceramics. We're seeing a huge development in high-purity alumina being used in high-end use ceramics. For example, medical prostheses, a lot of the robots that are being built have the high-purity alumina in the ceramics that are in there. Sapphire glass is being used in an extraordinarily expanding number of industries. In particular, for example, aerospace. Most airplane windows, in particular, defense force fighter jets, have sapphire glass around there. Missile tips often have sapphire in them. We've mentioned semiconductors. We mentioned the thermal inertness, sorry, of HPA. On the top of every little semiconductor is a little square, and that square has HPA in it to prevent the heat buildup.
It's also used to help polish the silicon carbide that's used in the semiconductors. There's a whole range of other alumina-related products which we can produce: aluminum nitrates, sulfates that are used again, a wide variety of nanotech industries. Finally, of course, lithium-ion batteries, which is also growing significantly. There are other replacements coming in for lithium-ion batteries, but amazingly enough, they still use HPA in those batteries. We see no shortage of demand over the next few years.
Perfect. Thank you for that. Milo asks, once you mine, what is your process prior to sale? Is this process included in your production cost?
It is indeed. Yes, that's the operating cost that we mentioned. As we're going to dig it up, transfer it to Perth, we have ready access to the reagents. It's a relatively straightforward chemistry that we use. There's nothing complex about it. It is all patent protected because of the order that we do things in. We truly believe that a combination of all those things will allow us to be the lowest cost producer globally of HPA.
Kim wants you to clarify that. When you talk about being the lowest cost producer, why is that? Is it because you're selling byproducts to hedge the cost?
That's an excellent question. Two things. First of all, obviously, the mining of the material is cheaper than most other feedstocks. The reagents that we use are relatively easy to get a hold of. They're relatively benign. There's no issue getting them, and they're readily available. Yes, there is a significant byproduct offset. We're going to produce potash, a very valuable fertilizer, as a byproduct. However, the feasibility studies that we've done have not included revenue for that. Even without that revenue, we would still be the lowest cost producer, probably by at least 15%- 20%. The extra byproduct really nails it for us.
Larry wants you to talk about any infrastructure that has to be built at the project.
The answer is maybe two sheds, but that's about it.
Okay.
The mining will only take place for three months of the year, and the rest of the time, they are going to just truck the material offsite. Apart from short-term accommodation, there's no requirement for any onsite permanent buildings. As I mentioned, we're going to leave a hole in the ground that's only one to two meters deep, and the long-term environmental liability here is about as close to zero as you can get.
Brian asks, how far from the development stage are you?
It is all really going to be driven by the offtake agreements, and we should be there within two years.
Perfect. Do you have any closing remarks for our viewers today, Mike?
Thank you once again for listening to the story. It is an unusual story. It's a very unique story. There is no other deposit like this that we know of anywhere in the world. They're all in Western Australia. You should certainly research the high-purity alumina industry. We're always here for questions at impactminerals.com.au and look forward to interacting with anybody that would like to ask us any further questions.
Perfect. Thank you so much. There you have it, Impact Minerals on the ASX: IPT. Thank you, Mike. We hope to see you again real soon.
Great, thanks very much.
All right, everyone. We'll be right back with our next presenter.