Andromeda Metals : Great White Kaolin Project - Definitive Feasibility Study

ASX ANNOUNCEMENT

6 April 2022
ABN: 75 061 503 375
Great White Kaolin Project - Definitive Feasibility study
Corporate details:	and Updated Ore Reserve
ASX code: ADN
Andromeda Metals Ltd (ASX:ADN, Andromeda) is pleased to announce that
Cash (31 Dec 2021): $42.8m
is has completed its Definitive Feasibility Study (DFS) for the Great White Kaolin
Issued Capital:	Project (GWKP, or the Project) in South Australia.
3,104,235,099 Ordinary Shares
The DFS reflects the latest information on the Project and confirms strong long-
70,300,000 Unlisted Options	term cashflows from its high-grade kaolin Mineral Resource and its unique
27,833,325 Performance Rights	products.
Results from the DFS include the following:
Directors	• High margin cashflows, with pre-tax net present value (NPV)8 of AUD613m
Melissa Holzberger	• Internal rate of return (IRR) of 36%
Non-Executive Chair	• Earnings before interest, taxes, depreciation, and amortization (EBITDA) of
AUD2,283m
James Marsh
• 28 year life-of-mine
Managing Director
• Average annual EBITDA of AUD81.5m
Joe Ranford
• Four stage approach with an initial capital cost of AUD93.8m
Operations Director	• 18-month design and construct duration to achieve first product to market
Andrew Shearer	• All capital expenditure subsequent to Stage One is currently intended to
Non-Executive Director	be funded by cash flows from the Project
• Project payback period of 5.9 years to achieve 600,000 tpa ore throughput
Andrea Betti
in Stage Three
Company Secretary
• Conventional mining and processing, resulting in high quality products
• Andromeda will now progress secondary approvals and detailed design.
Contact details
The DFS provides for the development of the base-line project underpinned
10/431 King William Street
by initial product range and allows for the opportunity to supply and build the
Adelaide, SA 5000	market and customer base.
Managing Director, James Marsh commented "The DFS confirms the Project
PO Box 1210	as a globally significant supplier of high value kaolin to international ceramic,
paint and other specialised markets. The completion of this stage in the
Unley BC SA 5061
development of the GWKP further advances Andromeda as a fast-growing
South Australian company with a vision to lead the world in the sustainable
Tel: [phone]
supply of superior quality industrial minerals and advancement
Fax: [phone]	of nanotechnologies.
[e-mail]
www.andromet.com.au

ANDROMEDA METALS LTD (ANDROMEDA, ASX: ADN)

Andromeda Metals Limited

Andromeda Metals Ltd | ABN 75 061 503 375 | 69 King William Road Unley SA, [e-mail]| www.andromet.com.au

Parameter	Life of mine (Total)
Plant feed (nominal)	dry metric tonnes (dmt)	300,000 (years 1-5) 600,000 (years 6-28)
Production (nominal)	Great White HRM™ (dmt)	260,000
Great White KCM™90 (dmt)	246,000
Great White PRMTM (dmt)	336,000
Great White CRMTM (dmt)	6,400,000
Weighted average product sale price (AUD/dmt)	653
Life of mine (years)	28
Strip ratio	2.3
Start-up capital (Stage One)	93.8
Sustaining capital (AUD million)	26.0
Revenue (AUD million)	4,706
EBITDA1 (AUD million)	2,283
Pre-tax cashflow (AUD million)	2,050
NPV8 (before tax) (AUD million)	613
IRR (% before tax)	36
Payback period (years)2	5.9

With the work undertaken in this DFS, the Project is positioned to produce a range of high value kaolin products for sale domestically and overseas. The high quality, consistency and large tonnage of the GWKP provides for a long-term operation offering generational employment opportunities for Poochera and the surrounding districts with opportunities to diversify and grow their economies. The Project offers up to 70 long term jobs on a residential basis and provides an opportunity to reverse the contracting of the regional community population.

Andromeda considers there is an ongoing and increasing demand for the GWKP products in a reducing global supply and Andromeda is well placed to capitalise on this opportunity.

A summary of key results is described below(Table 1). Additional information, including material assumptions are included in Appendix 1.

Table 1 GWKP Key Financial Indicators

• 1 Earnings Before Interest, Taxes, Depreciation, and Amortization

• 2 Includes payback of initial AUD 93.8 million as well as the further plant upgrades within that time

Overview of DFS

The DFS for the Great White Kaolin Project (GWKP, or the Project) was prepared by Andromeda Metals Ltd (Andromeda) and a range of experienced specialist consultants(Table 2). The DFS reflects the latest information on the Project, including marketing agreements and price forecasts. Technical research, including results from metallurgical test work, and confirmatory pilot plant batches have been included to inform the engineering design, project execution and financial modelling.

The DFS scope of work was to prepare a definitive level assessment of the Project, prepared to an accuracy level of +/-15% guided by the requirements of the Australian Institute of Mining and Metallurgy (AusIMM) guidelines (AusIMM 2012. Cost Estimation Handbook. 2nd Edition, Monograph 27. The Australian Institute of Mining and Metallurgy).

Capital and operating cost estimates have been developed by Andromeda and supported by supplier provided prices on defined scope of works supporting the staged execution strategy. This DFS varies from the June 2020 Prefeasibility Study (PFS) with the removal of direct shipping ore (DSO) and focusses on higher quality products for direct-to-market customers.

The DFS focusses on several products:

Great White KCM™90, a semi-refined high quality kaolin concentrate for sale for direct use, further refinement by other parties or to upgrade their resources.

Great White HRM™, a refined kaolin for sale for use as an additive in the concrete industry and other associated applications.

Great White CRM™, a refined, dried, bagged product for use by end-users in the high-end ceramics market.

Great White PRM™, a refined, dried, and bagged product for use by end-users in coatings and polymers markets.

The Project is proposed in four production stages. The staged capital costs have been developed in conjunction with independent and highly reputable consultant/contractor firms with experience to support the value-add concept of the DFS. The change was driven primarily by volatility in transport costs, the benefit of having in-house quality control and the improved value of refined kaolin products, issues that have significantly moved since pre-Covid PFS. The DFS scenario was driven by value adding, controlling risk through reduced capital exposure, and providing a quality product to maximise the value of the Mineral Resource.

The DFS provides for the development of the Project based on foundation products to establish and build the market and customer base.

Table 2 Major DFS contributors

Content	Contributor
Study management	Andromeda Metals Ltd
Geology and Mineral Resource	Andromeda Metals Ltd H&S Consultants
Geotechnical	WSP Global
Mining and Ore Reserve	Proactive Mining Solutions Pty Ltd
Ore characteristics and historical testwork	Andromeda Metals Ltd AKW Equipment + Process Design, based in Hirschau Germany Innovative Filtration Solutions Metso Outotec
Mineral processing and plant engineering	Primero Group Ltd Ammjohn PE Pty Ltd MinEcoTech Pty Ltd
Infrastructure and services	Andromeda Metals Ltd Tonkin Consulting Pty Ltd
Environment	JBS&G Australia Pty Ltd
Community and stakeholder	Design for Growth (D4G)
Capital costs and operating costs	Primero Group Ltd Tonkin Consulting Pty Ltd Ammjohn PE Pty Ltd Andromeda Metals Ltd
Marketing	TZ Minerals International Pty Ltd (TZMI)

The DFS includes sections and supporting studies relating to:

Tenements and ownership including approvals and permitting Legal, regulatory and policy

Geology and Mineral Resource - geological evaluation and Mineral Resource estimation, reported in accordance with JORC 2012

Hydrology, hydrogeology, and geotechnical analysis

Mining and Ore Reserve - mining design, mine scheduling and Ore Reserve, reported in accordance with JORC 2012

Ore characterisation and testwork - testwork, ore characterisation and process flowsheet development

Mineral processing and plant engineering - process and non-process infrastructure engineering design

Infrastructure and services - including road access, water supply infrastructure and power supply Workforce

Logistics - road and sea freight

Environment - existing environment and environmental impact Community and stakeholder engagement including social impact Project execution - including implementation schedule

Capital and operating costs - mining, processing, engineering, procurement and construction, owners' costs and contingency.

Products and marketing strategy including product quality evaluation and pricing review Risk and opportunity

Financial analysis.

Ore Reserve

The GWKP DFS is based upon developing a single kaolin deposit, the Great White Deposit.

Using the modifying factors discussed in this report,Table 3below can be considered an Ore Reserve for the GWKP, using the resource model classifications.

Table 3 Ore Reserve - GWKP

Ore Feed Category	Reserve Category	Tonnes	Yield	Halloysite	Brightness (R457)	Fe2O3
Great White PRMTM	Great White CRMTM
(Mt)	(% of whole rock)	(% in -45 µm fraction)
Great White PRMTM Feed	Proved	0.4	27	18	3	87	0.3
Probable	1.1	24	16	1	87	0.3
Subtotal	1.5	25	17	2	87	0.3
Great White CRMTM Feed (Great White KCMTM90 & Great White HRMTM)	Proved	4.8	-	45	15	84	0.5
Probable	8.9	-	46	11	83	0.5
Subtotal	13.7	-	46	12	83	0.5
Total	15.13	-	-	-	84	0.5

Great White KCM™90/HRMTM are products of the CRM feed and process with minor changes in processing methodology.

An accompanying consent statement for this document applicable to the JORC 2012 Code for the publication of these reserves is attached as Appendix 1.

An accompanying Table 1 document the JORC 2012 Code for these Ore Reserves is attached as Appendix 2.

Material classified as Measured and Indicated in the Mineral Resource estimate have been directly converted to Proved and Probable Reserve. The Ore Reserve comprises of 34% Proved Reserve and 66% Probable Reserve (Table 4). The Production Target comprises of 34% Proved Reserve, 65% Probable Reserve and 1% Inferred Resource. Inferred Resources are not included in the Reserve and are not considered within the pit design process.

3 Table subject to rounding errors.