Archer Exploration (AXE) to turn coal pain into magnesia gain
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
When the coal industry closes a door, the magnesia industry can open a window if the latest plan from Archer Exploration (ASX:AXE) is anything to go by.
At its annual general meeting earlier today, chairman Greg English told AXE investors while the Leigh Creek coal field closure was sad for the local community, it did provide an opportunity for its magnesia dreams.
Earlier this year Alinta Energy confirmed that it was shutting down operations in the region as it sought to shift its power sources away from coal.
It has previously said its site would be shut down in 2017 but has now sped this process up, with AXE sensing an opportunity.
AXE had previously talked about ramping up its magnesite dreams, signing a heads of agreement with Leigh Creek Energy to “explore synergies” in getting AXE’s magnesite deposit up and running.
Better known as a graphite miner in South Australia, AXE now thinks the left over infrastructure from the Alinta closures provides an opportunity for it to get a “magnesia-based mining venture” up and running.
“Development of this valuable resource has previously been restricted by both the lack of infrastructure and the inability to access existing Leigh Creek coalfield infrastructure,” English said.
“However, Alinta’s decision to close the Leigh Creek coalfield from next week means that its railway line and associated infrastructure is potentially available to Archer.”
He added that it had already been in talks with the South Australian government about a potential project.
About AXE’s magnesite project
At the moment, AXE’s magnestite deposit in Leigh Creek is considered secondary to its graphite deposits in the Eyre Peninsula.
However, to the north east it has its foot on a total JORC compliant magnesite resource of 453 million tonnes grading at 41.1% magnesium oxide.
Previously, companies had put forward a bankable feasibility study for a 50,000 tonne per annum magnesium metals plant.
However, cheap magnesia from China put these plans on hold until Archer got its hands on the southern edge of the resource in 2011.
“Our belief is based around a very long-term profitable business case for a project producing Caustic Calcined Magnesia (CCM) or Dead-Burned Magnesia, negating the high capital costs faced by the previous owners,” English said.
“In essence, much of the work needed to develop a magnesia mining operation at Leigh Creek has already been completed and simply needs updating.”
He said an average large magnesia operation produced 150,000 tonnes per annum of CCM, based on throughput of 315,000tpa.
With a resource of 453Mt, English said, it would not be difficult to see Leigh Creek as an ‘almost inexhaustible’ supply of high-grade magnesia.
AXE shares are up 1.12% in intraday trading at 9c.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.