The Andromeda (ASX: ADN) share price is up today on an agreement that will see its kaolin processed into high purity alumina.
The post The Andromeda (ASX:ADN) share price is soaring 7% today. Here’s why appeared first on The Motley Fool Australia. –
The agreement could see Andromeda build a facility to process halloysite-kaolin from the Great White deposit – a joint venture between Andromeda and Minotaur Exploration Ltd (ASX: MEP) – into high purity alumina (HPA).
After reaching 8.29% higher in early trade, the Andromeda share price has slightly retreated and is swapping hands for 22 cents at the time of writing, up 7.3%.
The Minotaur share price has also taken a similar trajectory today and is currently up 4.55% trading at 11.5 cents after a 9% peak near the open.
Let’s take a look at today’s news from the company.
Andromeda’s potential new kaolin venture
Andromeda has entered into an understanding with AEM to use the tech company’s patented process to make HPA using kaolin.
AEM produces HPA for high growth markets, including the lithium-ion battery sector. Its Canadian facility, where it undertakes the process, is the only one in the world capable of producing HPA at 99.99% purity from kaolin.
If all goes to plan, Andromeda will build a facility in Australia to produce HPA using AEM’s patented method and kaolin from the Great White deposit.
Andromeda and AEM will also consider entering into a commercial arrangement to sell Andromeda’s future HPA products through AEM’s distribution network.
The memorandum of understanding will be exclusive for 90 days. During this time, Andromeda will carry out due diligence and testing on AEM’s HPA process.
A large sample of Great White kaolin will also be sent for testing at AEM’s Canadian facility.
Kaolin samples from Andromeda’s wholly-owned Mount Hope Project will also be tested to see if they’re a suitable HPA feed resource.
According to Andromeda, AEM is planning to build an HPA plant in the United Kingdom. This means Andromeda could use the UK plant’s plans as a template to build its own.
Commentary from management
Andromeda managing director James Marsh commented on the MOU, saying:
We have known for some time that our kaolin feed was a premium material for HPA production, but we have taken our time in order to be extremely thorough in identifying the right partner to drive this opportunity forward. Andromeda considers that having access to proven commercial technology in this sector will allow us to fast-track this HPA opportunity towards commercialisation.
AEM CEO Julian Ford added:
Access to Andromeda Metals’ high quality kaolin projects will help AEM in its goal to be the preferred supplier of HPA to the world’s new Electric Vehicle’s Lithium-Ion Battery giga-factories and global LED manufacturers.
Andromeda share price snapshot
The Andromeda share price has fallen 28.29% since the beginning of this year but is up 270% over the last 12 months.
Andromeda has a market capitalisation of around $442 million, with approximately 2 billion shares outstanding.
The Minotaur share price is also struggling on the ASX this year, down 38.84% year to date. Despite a hard 2021, Minotaur shares have also made significant gains in the past 12 months, up 140% since this time last year.
Minotaur has a market capitalisation of around $55 million, with approximately 501 million shares outstanding.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of May 24th 2021