Heavy Minerals Limited’s Pre-Feasibility Study for its Port Gregory Garnet Project delivers a robust 24-year mine life with a maiden Ore Reserve and a post-tax NPV of A$322.8 million, highlighting a low-capital, high-return industrial mineral operation.
- Maiden Probable Ore Reserve of 85.5 Mt at 4.43% THM for 3.3 Mt garnet
- Post-tax NPV of A$322.8 million and IRR of 47.6%
- Development capital estimated at A$122.1 million with ~3.1-year payback
- Conventional dry mining with no drilling, blasting, crushing or permanent tailings
- Targeting coarse alluvial garnet grades facing global supply shortages
Robust Economics Back Long-Life Garnet Operation
Heavy Minerals Limited (ASX:HVY) has unveiled a Pre-Feasibility Study (PFS) for its 100%-owned Port Gregory Garnet Project in Western Australia, revealing a project with a post-tax net present value of A$322.8 million at an 8% discount rate and a striking internal rate of return of 47.6%. The study delivers a maiden Probable Ore Reserve of 85.5 million tonnes at 4.43% total heavy minerals (THM), translating to 3.3 million tonnes of contained garnet, underpinning a 24-year mine life.
Development capital is pegged at a modest A$122.1 million, including owner’s costs, with a peak funding requirement of approximately A$89.5 million. Payback is expected in just over three years from first production, signalling a swift return of invested capital.
Free-Digging Deposit Drives Low-Cost Mining
The project’s geology is a standout feature: a shallow, free-digging coastal dune and strandline heavy mineral sand deposit that requires no drilling, blasting, crushing, or grinding. This translates into a mining operation with a low strip ratio of 0.22:1 and conventional earthmoving equipment, reducing operational complexity and risk.
The absence of a permanent tailings storage facility further lowers environmental and closure liabilities, with tailings managed through temporary storage and progressive backfilling. The dry mining approach also supports a compact site layout and modest infrastructure requirements.
Targeting Coarse Garnet Grades Amid Market Tightness
Port Gregory is positioned to produce coarse alluvial almandine garnet, specifically 20/40 and 30/60 mesh grades, which the company identifies as being in shortest supply globally. The project is forecast to average approximately 143,000 tonnes per annum of these coarse grades in the first nine years, before moderating to 122,000 tonnes per annum over the life of mine.
Garnet purity is exceptional, with coarse products assaying around 99% garnet, meeting the ISO 11126-10 international standard for abrasive blasting and waterjet cutting applications. The project also yields an ilmenite by-product, adding incremental revenue at low marginal cost.
Market data from TZMI and independent pricing assessments confirm a structural shortage in coarse alluvial garnet supply, exacerbated by the recent care and maintenance of the Lucky Bay garnet operation. This supply gap bolsters the pricing assumptions underpinning the financial model, which applies a weighted average year-one basket price of US$555 per tonne with real annual escalation on key grades.
Renewable Energy and Infrastructure Advantages
Power for the operation will come from a hybrid LNG, solar, and battery energy storage system, with a projected renewable energy fraction of 34% in year one. This approach reduces exposure to diesel price volatility and lowers emissions from the outset, with the capital cost of the power station borne by an independent provider under a contract arrangement.
The project benefits from established regional infrastructure, including sealed road access to the Port of Geraldton, approximately 105 kilometres away. Product will be trucked to an offsite storage and screening facility at Narngulu before bulk shipment via Berth 4 at Geraldton, a berth already handling mineral sands products suitable for the project’s parcel sizes.
Funding and Development Pathway
Heavy Minerals does not yet have funding in place for Port Gregory’s development and is actively advancing funding workstreams, potentially involving a combination of debt, equity, royalties, or pre-sale arrangements. The company highlights the project’s low capital intensity and strong economic fundamentals as key enablers for securing financing.
Executive Chairman Adam Schofield emphasised the depth of the study, which includes a maiden Ore Reserve, full Mineral Resource estimate, bulk metallurgical test work, tendered power solutions, and an independently assessed pricing model. He also noted that parallel workstreams in approvals, product qualification, distribution, and funding have advanced alongside the PFS, positioning the company well for the next phase.
Risks and Next Steps
The study identifies the principal risks as commercial, including product qualification, distribution, pricing, and funding. Environmental and compliance risks focus on securing water supply and managing dust and noise, with hydrogeological testing planned for early 2027 to address water availability.
Next steps include advancing the Definitive Feasibility Study, progressing mining lease and environmental approvals, continuing offtake and product qualification discussions, and advancing funding workstreams toward a final investment decision.
With a 24-year mine life, strong margins, and a niche product in tight supply, Port Gregory stands as a compelling industrial mineral project. However, the path to development hinges on securing funding and completing regulatory approvals, making the coming months critical for Heavy Minerals.
Bottom Line?
Port Gregory’s strong economics and low capital needs set a promising stage, but funding and approvals remain the gatekeepers to unlocking value.
Questions in the middle?
- How will Heavy Minerals structure funding to minimise shareholder dilution while advancing development?
- Can the company secure binding offtake agreements to underpin pricing assumptions amid market volatility?
- Will hydrogeological testing confirm sustainable water supply to mitigate the project’s highest environmental risks?