LON:EAAS | Alexander Mining - Intellectual Property For An Ammonia Based Heap Leach Process

17th Mar '10 by AbAngus

7 comments 3960 reads

Alexander Mining (AXM) is a £17M company whose main asset is a proprietary heap leach technique for Cu (and Zn). It also has 2 South American projects (Cu/Ag in Argentina and Au in Peru) but these are effectively on ‘care and maintenance’. It had a cash position of £4.18M at the end of June 09. Expenditure was £0.7M for the previous 6 months and has presumably continued to be low.

Recently the company has received requests to use its proprietary techniques under licence - and one non-binding offer to buy them outright.

The company’s website is here: http://www.alexandermining.com/

The latest company presentation (for the AGM June 2009) is here: http://www.alexandermining.com/user_files/downloads/LATEST_Presentation_AGM_3_Jun_2009_FINAL.pdf

It gives a useful summary of the company and its AmmLeach system. Slide 28 suggests that using the company’s process would save a Cu miner $2.80 per tonne of ore processed. Slide 19 extrapolates this to $143M over a 10 year mine life for a mine producing 50,000 tons of Cu pa.

Over the past year or two there has been a fair amount of interest in the process and the AGM presentation reports that 11 miners were paying at that time for test work. The subsequent approaches received by the company to use the technique under licence (or buy it outright) were reported in this RNS dated 4 Feb 2010: http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10365590

The company promptly commissioned an independent report into the savings that might be attributable to the technique and is going to appoint an adviser on its commercial valuation.

Valuation: I haven’t much of a clue as to how much licence revenue the technique should generate - or the value of an outright purchase. Bag of a fag packet calculations would suggest that licencing 3 mines, each producing 75,000 tons of Cu from ore grading at 0.6%, with a licence fee of 50 cents per ton of ore used, would generate about $19M pa. Alternatively, a 0.5% royalty on the Cu sales (at $7,500 per ton) would yield about $8.5M pa. Since Slide 16 states that global Cu production is 17M tpa there would appear to be scope to increase these figures, but they should not be taken as authoritative in any way.

Technical Risk: One thing bothers me - Slide 22 of the presentation gives a history of several previous attempts to heap leach using Ammonia…

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AbAngus

23rd Mar '10

AXM have tody released their 'Independant Technical Expert's Report'. See: http://www.investegate.co.uk/Article.aspx?id=201003230700099804I

The headline figures are that AXM's proprietary Ammonia heap leach process would save a typical 50kpa Cu mine about 30% in capital costs and 42% in runnning costs. It is a full RNS and gives a detailed breakdown of the costings.

Martin Rosser, CEO, said: "The report clearly shows that under the two scenarios used of heap leaching and agitated leaching, there should be substantial capital and operating cost savings by using Alexander's AmmLeach® technology. For example, the savings range from U$94-177m for capital and US$29-51m per annum for operating costs. Moreover, these figures are for one medium sized copper mine only, and amply illustrate the major potential commercial value of our AmmLeach® technology for the copper industry alone."

Given that AXM have received a number of requests to use their product under licence - and one request to buy it outright - it looks like they have a money spinner on their hands.

AA

rpcroft

"save a typical 50kpa Cu mine about 30% in capital costs and 42% in runnning costs"

Wow

Exceptionally interesting, thanks for the lead AbAngus.

24th Mar '10

Thanks to 'Oh Wise One' on 'iii' for highlighting that there is a Minesite article out today giving more background to AXM. It can be found at:

http://www.minesite.com/index.php?id=65&tx_ttnews[tt_news]=68100

All upbeat stuff - although they do comment:

The next big step will be to get a commercial deal signed and, if possible, out in the open. At that stage, when they no longer have to deal in hypotheticals, investors may start to appreciate the real potential of Alexander’s technology, and push the shares back up to the 30p-plus levels they were at a couple of years ago. As it is, right now, the shares are just a penny or so off a two-year high. And, all other things being equal, that’s not bad progress. Watch closely for more news.

6th May '10

Prelims out today: http://www.investegate.co.uk/Article.aspx?id=201005060700084141L

Lots of upbeat noise about the commercialisation of AmmLeach plus a 'healthy cash position of £3.54M at 31 Dec 09'.

No timescales are given of likely agreements with the 'number of multinational companies' that have expressed an interest in using AmmLeach under licence - or even buying the IP outright - but 'the progress made in moving towards the commercialisation of our proprietary leaching technologies, especially AmmLeach^®, has been excellent.'

There is also comment (but no concrete news) on the agreement with RPT last August - under which AXM identifies mining projects suitable for AmmLeach and then RPT funds a joint venture. 'Several opportunities have been presented to RPT and taken to the next stage of evaluation.'

Finally, they are in negotiation to sell the Leon property in Argentina. 'Regardless of the outcome of the potential sale, the Group had a comfortable cash postition of £3.54m at the end of 2009.'

In short, the company making prospects still hinge on the prospective sales of AmmLeach - which is stated once again to be a real money saver for Cu laterite miners: For example, in a study of one medium sized copper mine, the savings were estimated to be around 30% for capital and around 43%, for operating costs, amply illustrating the major potential commercial value of our AmmLeach^® technology for the copper industry alone. Although the flow sheet and equipment for both process options is identical in many areas, the major part of the differential is due to the fact that instead of an expensive acid plant, the AmmLeach^® option uses a much lower capital cost ammonia plant and the cobalt circuit is much simpler and cheaper.

The Company is confident that it will be able to convert the strong interest shown in its technology into licence and royalty fee income for the benefit of its shareholders.

I certainly hope so!

30th Oct '10

Having got bored with the lack of any deal (and a bit suspicious that maybe the patents weren't watertight) we sold our punt sized holdings in AXM a couple of months ago.

HOWEVER, we have recently bought back in because:

1. The company that offered to buy the IP outright earlier this year was rumoured to be Freeport McMoRan (FCX). FCX announced on the 22nd Oct that they have finally struck a deal with the government of DRC to develop the Tenke Fungurume mine. Current plans are to upgrade the output from 250mm lbs Cu pa to 290 mm lbs, starting in 2011. AIUI, this is exactly the sort of orestock that would best benefit from AXM's AmmLeach process.

2. In their Interims (16 Sep) AXM noted that the initial patent had been granted in South Africa - and that '... the patent is in turn now subject to importation into the DRC.'

All in all - and given the DRC's unsavoury history of playing fast and loose - it is logical to think that no AXM/FCX deal would have been possible until FCX was granted copper bottomed mining concessions (so to speak). Especially as AXM is keen to receive its reward in the form of a piece of the mining action. If this is the explanation for the delay in getting any deal, then the road is now open..... and a deal could be transformational for the company. At least we hope so! The economic case put forward by AXM for its AmmLeach technology still looks impressive.

But DYOR of course,

AA

13th Jan '11

A few things have happened since the above posts:

1. In November, RPT (who have an agreement with AXM to look for mining projects suitable to be exploited using AXM's technology) announced a proposed merger with a private oil and gas company. This might see them move to being purely O&G - but for the moment they have confirmed that they have no plans to withdraw from the arrangement with AXM (under which they pay AXM $25,000 in monthly consultation fees).

2. In December AXM sold its shares in Mariana Resources for £470,000

3. Also in December AXM announced it had signed a letter of intent to sell its Argentinian assets for $2.2M (thus allowing AXM to concentrate, as planned, on its IP).

And now for the biggy:

4. On the 10th Jan AXM suddenly announced it had opened a dual listing on the TSX:V (tier 2). This came as a bit of a surprise to me - and I can't find any hint of any plan to do this in earlier RNSs on a cursory search. The dual listing makes it eligible for an ISA. There was no associated placing - but then AXM should have sufficient cash to keep the lights burning at present.

The real biggy, of course, would be for them to do a deal to sell or licence out their IP. I can't for the life of me see any reason to list on the TSX unless the directors think that something is in the air - and I note the following from the FT:

Among small caps, Alexander Mining added 11.1 per cent to 12½p after its shares listed on Canada’s TSX Venture Exchange. In addition, there was speculation that Alexander was about a month away from announcing a significant deal for its MetaLeach mineral processing technology. (My bold)

http://www.ft.com/cms/s/0/0f8818a0-1c89-11e0-a106-00144feab49a.html#axzz1AvLFYUFv

Hat tip to Kooba on ADVFN for the FT comment...

7th Feb '11

The SP has been gradually rising - the bid is up to 17p this afternoon.

This may be partly the result of a Minesite article a few days ago that suggested AXM might be poised to announce its first big deal at the Indaba Conference this week. (If it does then I guess tomorrow might be the Big Day.)

http://www.minesite.com/nc/minews/singlenews/article/alexander-is-gearing-up-to-commercialise-its-new-mineral-processing-technology-using-the-african-co.html

AA

Alexander Mining - Intellectual Property for an ammonia based heap leach process

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AbAngus

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