King River Resources (ASX:KRR): Interview with Doug Flanagan

September 28, 2021

King River, King River Resources, KRR, video

Summary

King River Resources

We spoke with King River Resources Engineering Manager Doug Flanagan about the origins of KRR’s ARC process for making High Purity Alumina (HPA) and the market opportunity now that the pilot plant is going up in Kwinana.

See full transcription below.

 

Read our most recent article on KRR here

 

Transcription

 

Stuart: Hello and welcome to Stocks Down Under. My name is Stuart Roberts, and I’m one of the founders and co-editors of our publication. And with me today in Perth is Mr. Doug Flanagan who’s the Head of Business Development at King River Resources. Doug, good afternoon to you.

Doug: Afternoon, Stuart. Thanks for having me today.

Stuart: It’s Wednesday, the 22nd of September, 2021. Doug, you’ve been working at King River Resources now for about three months. And you’ve landed yourself in a really interesting opportunity. You get to help design a completely novel process for making high purity aluminum. Talk to us if you will about how King River Resources has a different way of making high purity aluminum from some of the other companies I would’ve read about such as Alpha HPA.

Doug: Yeah, so the background on how we got here is initially we were trying to develop the titanium vanadium deposit up in the east of the Kimberley called the Speewah Deposit. Now as we were refining that flowsheet, we developed a way that we could quite easily drop out aluminum from the ore. This then evolved in the lab to being able to take a commercially available feedstock and produce high purity aluminum. We’ve called this our novel arc HPA process and what differentiates us from the rest of the industry is the other ways that HPA can be produced is they’ll take pure aluminum metal. They’ll then dissolve that to produce HPA which is quite an expensive route to go down, or they’ll use aluminous clay such as kaolin and they’ll use that to produce HPA. But then you’ve got a lot of impurities, processing plants, and other challenges to deal with.

Stuart: So, you have…not completely but you’ve liberated your process from the source of the ore. You can just buy commercially available aluminum chemicals and from that produce high purity aluminum.

Doug: That’s correct. So, we don’t need to build a mine up in the Kimberley anymore. So, we can just build a processing plant somewhere here in Kwinana using readily available commercial feedstocks. We can then turn that into either 5N precursors or 4N HPA. That presents some great opportunities. And now that we don’t have to build a mine, there’s no processing plant in the Kimberley, no accommodation, no fly-in, fly-out workforce, and obviously, that significantly reduces the CAPEX of the project. Our OPEX comes down as well. So, it really changes the economics of how we assess the project.

Stuart: Right. Now the company recently published a feasibility study that involved Speewah related ore. Now that involved $200 million worth of capital expenditure but the net present value was more than a billion dollars.

Doug: Yes.

Stuart: That gives investors an idea about the kind of premium that high purity aluminum can trade for. But you’ve gone one better. The company recently announced the ability to make 5N using the arc process. Was that a surprise to you?

Doug: It’s good to have a win. I wouldn’t say it’s a surprise. We run a very, very experienced and a very lean team here. So, they produce that at the laboratory level and we’re in the process now of scaling that up to a mini powerplant within our laboratory to see how we can progress that opportunity.

Stuart: Right. So, the fruits of that is not only can you make the actual 4N and 5N…and, you know, for those investors who aren’t familiar with it, that just refers to, you know, decimal points after the 99 in terms of level of purity. You can also make the precursors. And I was surprised to learn that sometimes the precursors trade for a higher price than the actual finished product itself. Why is that?

Doug: The pricing of that…there’s a bit of opaqueness around the pricing of the various precursors. I guess the way we see it is we wouldn’t necessarily say that the precursors will trade for a higher unit price than the HPA but there’s certainly…the cost of producing the precursor is less than producing the HPA and because we can produce…we’re looking to produce a variety of precursors and that opens then a much greater market than just relying on HPA as a product.

Stuart: Right. Now for those investors who are unfamiliar with high purity aluminum, talk to us about some of the end uses that we find in the 21st-century economy for that unique commodity.

Doug: Yeah, well, the HPA is essential in lithium-ion batteries. The HPA is used to coat the separator. It’s also used to…involved in the captodative materials for the cathode and will also…there’s research going to using it to coat the graphite anode of the battery as well. And as well…so these precursors go into some of the captodative materials, potentially into other battery chemistry opportunities. And then HPA is also used in the LED industries and some of the other emerging technologies.

Stuart: Right. So, here’s a relatively unknown Western Australian company that’s now positioning itself with the unique way of making the product. And everything looks good on the benchtop at the moment. You’re building that powerplant down at Kwinana. If we were having this conversation a year from now, what would you liked to have achieved between now and then?

Doug: So, the initial powerplant that we’re building, it could…depending on the size, we may not even have to build it in Kwinana. We may have it in a different industrial zone. But in a year’s time, I’d like to say that we’ve been successful and we’re now scaling up and engaging more end-users in our products.

Stuart: Now I’m not sure that King River have discussed this all that much but is it fair to say that your process is gonna be much less energy-intensive than some of the competitors?

Doug: We believe so, yes.

Stuart: Right. And that’s important obviously because…look, I’m from the Hunter Valley. We used to have an aluminum smelter near where I lived. And I’m sure when they switched it on sometimes, they blacked out the entire neighborhood. What investors need to know is part of the cost advantage is, yeah, you’ve got a low intensity…a low energy intensity way of making a high margin product, right?

Doug: That’s correct. And one of the things a lot of the…especially the carmakers now, they’re looking at the provenance of where all their products come from. And the big push at the moment is this ESG credential. So, one of the ways we’ll be able to sort of stand apart from these other companies if they utilize our products, we’ll be able to differentiate them by proving that they have a smaller carbon footprint which then reflects in their final end product as well.

Stuart: Right. Now many investors who know King Resources probably don’t know you very well. Talk to us about your background. You were sharing with me a little while ago you had the misfortunate of graduating in… I think it was mining engineering about 2001. Not a time when many in the mining industry were hiring new workers. So, you’ve had to reinvent yourself since then.

Doug: So yeah. So, the gold price was pretty awful back in around that 2000, 2001.

Stuart: Yeah, don’t remind me, yeah.

Doug: I went back to Curtin University and then studied mechatronic engineering. So, I graduated with a bachelor of honors in mechatronic engineering. But then that sort of made me a jack of all trades and a master of none. And I moved basically from the pit side to the plant side. So, I was working for some of the other engineering firms on the terrace designing gold plants, copper plants. I’ve worked on rare earth plants, been to North America, and worked on LNG and bitumen refinery. So, I haven’t chosen to specialize in any particular area. My scope of work’s been, you know, quite broad.

Stuart: Right.

Doug: Been semi-residential in Malaysia, in Africa. Moved to North America for two years for some projects. So yeah, I’ve had a good exposure to various industries.

Stuart: Your career is one of those careers where if I give you a process task to solve, you will apply that massive outsized brain of yours until we’ve got a process that works, right?

Doug: Well, I wouldn’t say a massive brain but what I will do though is I’ll know the right people to talk to. So, I might not have the answer for you but I won’t BS you. What I’ll do is I’ll go find the right people and we’ll get the solution and get the job done.

Stuart: Yeah. Now to that end, King River has a great relationship with a firm called SCI which has done some great basic research for you to get you this far. Who else is working with you on this project that you’re at liberty to talk about?

Doug: So, SCI might be known to others as TSW but they’re an analytical lab based in Bibra Lake. We’re also working with Como Engineering here in Perth as well. They’re well known in the industry. Our PFS actually does list several of the key subject matter experts that we are involved with.

Stuart: All right. So, yeah. This is a great brains trust working on this. Doug Flanagan, keep up the good work. And here’s to a much more efficient process ready to scale up a year from now.

Doug: No worries. Thank you. Cheers, Stuart.