ABN 52 119 062 261 ANNUAL REPORT 2023
Corporate Directory BOARD OF DIRECTORS Peter Unsworth Non-Executive Chairman Michael Jones Managing Director Paul Ingram Non-Executive Director Frank Bierlein Non-Executive Director COMPANY SECRETARY Bernard Crawford REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS 9 Richardson Street West Perth, WA 6005 Telephone: +61 (8) 6454 6666 Email: info@impactminerals.com.au Web: www.impactminerals.com.au AUDITORS Hall Chadwick WA Audit Pty Ltd 283 Rokeby Road Subiaco, WA 6008 SHARE REGISTRY Advanced Share Registry Limited 110 Stirling Highway Nedlands, WA 6009 Telephone: 1300 113 258 (Within Australia) or +61 8 9389 8033 (International) Facsimile: +61 8 6370 4203 Email: admin@advancedshare.com.au Website: www.advancedshare.com.au SECURITIES EXCHANGE LISTING The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Perth, Western Australia ASX Code: IPT, IPTOB
Impact Minerals Ltd Annual Report 2023 1 Impact Minerals Limited Contents 2 Chairman’s Letter 3 Review of Operations 26 Directors’ Report 40 Auditor’s Independence Declaration 41 Consolidated Statement of Profit or Loss and Other Comprehensive Income 42 Consolidated Statement of Financial Position 43 Consolidated Statement of Changes in Equity 44 Consolidated Statement of Cash Flows 45 Notes to the Consolidated Financial Statements 69 Directors’ Declaration 70 Independent Auditor’s Report 76 Shareholder Information 79 Tenement Schedule Impact Minerals Limited, an exploration company listed on the ASX since 2006, has an extensive portfolio of tenement holdings spanning over 5,500 km2 and aims to unearth Australia’s mineral-rich potential. The centerpiece of Impact’s endeavours is the Lake Hope High Purity Alumina (HPA) Project in Western Australia, set to revolutionize HPA production with very cost-efficient mining and innovative acid leaching technology. This will position Impact Minerals to meet the surging demand for HPA, recently listed on Australia’s list of critical minerals and a key component of the energy transition. Impact aims to be the dominant player in this market. In addition Impact Minerals is exploring for mineral resources across its portfolio which is prospective for a range of precious metals and battery and strategic metals including gold, silver, lead, zinc, copper, nickel, and platinum group metals (PGMs). Impact is well known for its forward-thinking strategies and the company is well placed to play its part in supplying the increased global demand for these essential components. Impact’s experienced directors, skilled in minerals exploration and corporate management, have a track record of exploration success and delivering value to stakeholders.
2 Impact Minerals Ltd Annual Report 2023 Chairman’s Letter Dear Shareholder, This year was a transformational year for your Company as we announced a major change in strategy with an agreement to acquire an 80% interest in the Lake Hope Project, an advanced High Purity Alumina (HPA) project located 500 km east of Perth in the Tier 1 jurisdiction of Western Australia. Lake Hope is a dry playa lake containing a unique deposit of fine-grained, high-grade aluminous clays in the top few metres of the lake bed that offers many natural advantages for both mining and processing and which Impact believes will lead to it being one of the lowest cost producers of HPA globally. The deposit will allow a shallow, very low-cost, free-digging mining operation that will have a minimal environmental footprint, with the material to be trucked offsite to an existing industrial yard for processing. This should allow for a relatively straight forward approvals process. Previous bench-scale metallurgical test work has produced HPA via a disruptive sulphuric acid hydrometallurgical process that is more than cost-competitive with other producers both in Australia and globally. In addition, a maiden mineral resource of 3.5 million tonnes at 25.1% alumina for a contained 880,000 tonnes of alumina has now been defined, and this is enough to support a multi-decade operation at a benchmark production rate of 10,000 tonnes per year. The HPA chemical market is a very high-margin market that is forecast to grow strongly over the next decade with increasing demand in particular coming from the LED and lithium-ion battery sectors. Impact is now undertaking a Pre-Feasibility Study to earn its 80% interest in the project, and the Company is aiming to bring Lake Hope into production over the next few years to deliver high-margin end products with current prices for benchmark 4N HPA (>99.99% purity) of about US$20,000 per tonne. Your Directors are very excited about the potential of Lake Hope to deliver a very profitable mining operation we are looking forward to an exciting few years ahead of us as we push forward with the development of this unique resource. The year has also been rewarding with exciting early-stage exploration results for a range of battery and strategic minerals across a number of Impact’s other projects, in particular at the greater Arkun-BeauJumbo project area centred about 150 km east of Perth. Targets for Ni-Cu-PGM, lithium pegmatites and Rare Earths have all been revealed and we look forward to extensive drill programmes in 2024. A further highlight of the year was the selection of Impact to be one of the inaugural participants in the BHP Xplor programme, principally to fund exploration for copper at the company’s Broken Hill project. Under this prestigious programme, Impact received US$500,000 to accelerate exploration at Broken Hill, and a significant amount of new data has been acquired. This has given us new insights into this historic region, and we will push ahead with further exploration there once all the data has been compiled. Impact’s selection for the Xplor programme is a testament to the skill, commitment and hard work that Managing Director Dr Mike Jones and his dedicated geological team continue to devote to the company and its projects. This commitment will come even more to the fore as Impact is now firmly on the road to development at Lake Hope and we look forward to more good news from across the portfolio in 2024. Peter Unsworth Chairman
Impact Minerals Ltd Annual Report 2023 3 Review of Operations Figure 1. Location of Impact’s projects in Western Australia.
4 Impact Minerals Ltd Annual Report 2023 Review of Operations continued In March Impact Minerals signed a binding term sheet with Playa One Pty Ltd, an unrelated private company, to earn an 80% interest in the advanced Lake Hope High Purity Alumina (HPA) Project in Western Australia. The Project offers Impact the opportunity to be a low-cost entrant into the HPA chemical market, a high‑margin business forecast to grow strongly over the next decade. The Project contains a globally unique deposit of high-grade aluminium clay minerals in the top few metres of a playa lake, which has unique physical and chemical properties that allow for low-cost mining and offsite metallurgical processing via a novel and cost-disruptive acid leaching process. Preliminary economic studies indicate that the production of HPA and related products from Lake Hope will be cost-competitive with current producers and other developers in Australia and globally. The project is a transformational acquisition for Impact and the company is focused on the challenge of developing the project and ensuring that Impact Minerals is the next “playa” in HPA. KEY TERMS OF THE BINDING TERM SHEET Impact earn an interest in Playa One Pty Ltd in stages according to the following terms: 1. Impact made a $25,000 cash payment for a six-week option to complete due diligence (completed). LAKE HOPE PROJECT 2. Impact has commenced sole funding a Pre-Feasibility Study (PFS) by paying $175,000 cash, issuing 50 million fully paid ordinary shares (escrowed for 12 months), and issuing 30 million unlisted options exercisable at 1.125c, vesting 12 months from the date of issue and expiring on 1 December 2025, to the shareholders of Playa One (completed). 3. Upon completion of a Pre‑Feasibility Study (PFS), Impact can enter an incorporated joint venture with the Playa One shareholders (through an entity representing them, Playa Two Pty Ltd). If so, it will acquire an immediate 80% interest in Playa One by issuing up to 120 million fully paid ordinary shares capped at a maximum value of $8 million (based on the 5-day VWAP before the election) to the Playa One Shareholders. 4. Upon completion of a Definitive Feasibility Study to be sole‑funded by Impact, Impact will issue up to 100 million fully paid ordinary shares capped at a maximum value of $10 million (based on the 5-day VWAP before the ASX announcement of the completion of the DFS) to the Playa One Shareholders. 5. Playa One shareholders will be free-carried to a Decision to Mine. Impact will maintain all Playa One tenements in good standing during this time. 6. If a Decision to Mine is made, the Playa One Shareholders may contribute to mine development costs or be diluted. If their interest falls below 7.5%, it will convert to a 2% net smelter royalty. PROJECT DETAILS The Lake Hope Project covers numerous prospective salt lakes between Hyden and Norseman in southern Western Australia, a Tier One jurisdiction (Figures 1 and 2). It comprises five granted exploration licences and three further exploration licence applications all of which are very poorly explored. The tenements cover about 238 km2 and are all 100% owned by Playa One. Figure 2. Location of Playa One tenements with options for trucking and off-site processing.
Impact Minerals Ltd Annual Report 2023 5 Review of Operations continued GEOLOGY The salt lakes of Western Australia are well known for their unique and complex hydrogeochemistry, which has led to the formation of a wide variety of economic minerals and brines within the playa systems. These include the world-class Yeelirrie uranium deposit (>100 Mlb U3O8), significant resources of potash brines, gypsum and lime-sand. The Lake Hope area was identified by Playa One as having unique climatic and geological characteristics that have resulted in the formation of what is probably a globally unique deposit of aluminium-rich material within the surficial clay layers of two small salt lakes, or “pans”, in the Lake Hope playa system. These pans are called West Lake and East Lake (Figure 3). The lake clays, which are only up to a few metres thick, have unique chemical and physical properties and consist almost entirely of aluminium‑bearing minerals that are plasticine-like in consistency and can be easily sampled with hand-held augers and push tubes (Figure 4). In addition, particle size distribution analysis demonstrates that virtually all the minerals are less than 16 microns in size, and from 60% to 80% of them occur at grain sizes of less than 5 microns (Figure 5). These unique characteristics have produced a near-perfect mineral deposit: a very high-value end‑product whose parent ore is: – very soft and shallow, allowing for extremely cheap free-digging with limited infrastructure requirements, no pre‑stripping, no selective mining, a tiny environmental footprint, and limited rehabilitation requirements. – naturally fine-grained with no need for crushing and grinding, allowing for transport to an off‑site processing facility that can be built on existing industrial sites (Figure 2). In essence, this is Direct Shipping Ore (DSO). – comprised of a few minerals that require only simple washing before acid leaching, thus allowing for low-cost straightforward metallurgical processing. Figure 3. Geology of the Lake Hope Project showing drill hole locations and average aluminium grade on East Lake and West Lake.
6 Impact Minerals Ltd Annual Report 2023 Review of Operations continued Figure 4. Lake Hope showing the push tube sampling method used to drill out the resource and an example of the lake clay from the push tube. Figure 5. Particle size distribution analysis for four samples. Sample LP0040 contains sandy particles at the base of the deposit. DRILLING AND ASSAY RESULTS A total of 251 holes have been drilled by hand-held auger and push tube methods across the two lakes, with all samples submitted for assay at Intertek Laboratories in Perth (see ASX Releases March 21st 2023 and 19th June 2023 for further details). The drilling has defined a uniform and coherent layer of aluminium-bearing clay in both lakes that is up to 1.65 m thick. The assays mainly returned very high grades of aluminium oxide (alumina - Al2O3) of between 24.5% and 27.8% Al2O3 and, significantly, with low amounts of potential contaminants such as CaO (0.05% to 0.08%), Fe2O3 (2.4-3.2%), Na2O (2‑4%) and P2O5 (0.05-0.07%). High-grade assays with greater than 27% Al2O3 are presented in Table 1, and a complete set of assays and drill hole collar information are in the ASX announcements of March 21st 2023 and 19th June 2023. The distribution of aluminium in the lakes is shown in Figure 6. Table 1. Drill hole results with assays greater than 27% Al2O3. HOLE_ID MGA_E MGA_N METHOD Interval Al2O3 K2O Na2O CaO Fe2O3 MgO MnO SiO2 Cr2O3 P2O5 LOI LHP002 243134 6409163 PUSH 0.6 27.09 6.78 3.5 0.23 2.93 0.86 BDL 18.45 0.01 0.08 30.06 LHP004 243115 6409462 PUSH 0.6 27.53 7.1 3.46 0.08 2.86 0.81 BDL 17.13 0.008 0.08 29.25 LHP006 243380 6409461 PUSH 0.6 27.47 7.09 3.55 0.1 2.84 0.83 BDL 17.09 0.008 0.07 25.27 LHP007 243378 6409314 PUSH 0.6 27.23 5.54 3.47 0.13 2.99 0.78 BDL 17.98 0.009 0.07 31.15 LHP014 241247 6410105 PUSH 0.5 27.47 5.99 3.35 0.06 2.94 0.8 BDL 22.98 0.011 0.061 26.88 LHP015 241249 6410294 PUSH 0.5 27.71 5.99 3.48 0.06 2.88 0.84 BDL 22.38 0.01 0.059 29.27 LHP016 241253 6410504 PUSH 0.5 27.48 5.87 3.49 0.05 2.98 0.81 BDL 23.39 0.012 0.059 28.37 LHP019 241407 6410302 PUSH 0.5 27.29 7.44 3.35 0.06 2.71 0.74 BDL 15.84 0.008 0.068 33.4 LHP031 240900 6410450 PUSH 0.62 27.11 5.95 3.39 0.05 3.07 0.8 BDL 23.14 0.011 0.05 30.08 LHP038 241100 6410450 PUSH 0.6 27.42 5.91 3.24 0.05 3.25 0.79 BDL 23.16 0.011 0.058 30.75 LHP039 241100 6410550 PUSH 0.88 27.63 6.09 3.44 0.05 3.14 0.79 BDL 21.54 0.011 0.061 30.41 LHP040 241100 6410650 PUSH 0.85 27.16 5.91 3.46 0.05 3.2 0.78 BDL 23.1 0.013 0.061 30.85 LHP042 241300 6410400 PUSH 0.82 27.48 6.03 3.49 0.05 3.19 0.81 BDL 21.98 0.011 0.063 30.62 LHP045 241400 6410600 PUSH 0.82 27.66 5.9 3.56 0.05 3.29 0.83 BDL 22.37 0.012 0.062 29.55 LHP046 241400 6410700 PUSH 0.88 27.07 5.85 3.99 0.05 3.08 0.82 BDL 22.27 0.011 0.058 30.69 LHP049 241550 6410650 PUSH 0.88 26.98 5.78 3.73 0.06 3.14 0.83 BDL 23.34 0.012 0.06 30.19 LHP065 242700 6409300 AUGER 0.85 27.34 7.03 3.23 0.1 3.11 0.76 BDL 17.76 0.009 0.076 32.4 LHP068 242900 6409100 PUSH 0.78 27.02 7.16 3.37 0.16 3.13 0.8 BDL 17.11 0.009 0.072 32.7 LHP070 242900 6409300 AUGER 1 27.2 7.05 3.45 0.09 3.2 0.79 BDL 17.98 0.009 0.079 32.31 LHP083 242666 6409208 PUSH 0.4 27.04 6.96 3.26 0.16 3.02 0.78 BDL 18.69 0.009 0.074 31.24 LHP099 241400 6410300 AUGER 1.3 27.1 6.08 3.56 0.06 3.05 0.75 BDL 22.79 0.011 0.061 30.28
Impact Minerals Ltd Annual Report 2023 7 Review of Operations continued Figure 6. Drill results showing the average Al2O3 grade for West Lake (top) and East Lake (bottom) at the same scale.
8 Impact Minerals Ltd Annual Report 2023 Review of Operations continued MAIDEN MINERAL RESOURCE ESTIMATE A significant, substantial and high‑grade maiden Mineral Resource Estimate (MRE) for Lake Hope was announced to the ASX on (June 19th 2023). The Mineral Resource Estimate is shown in Table 2 and is reported in accordance with the requirements of the JORC Code 2012 by resource consultants H and S Consultants Pty Ltd (H&S) of Brisbane, Queensland. All drill hole information and assay data are provided in the ASX Release dated June 19th 2023. Table 2. Lake Hope Alumina Mineral Resources. The resource estimate is 3.5 million tonne at 25.1% alumina (aluminium oxide, Al2O3) for a contained 880,000 tonnes of alumina. The Mineral Resource, 88% of which is in the higher confidence category of Indicated Resources, is hosted exclusively by the lake clays. The information in this report related to the Mineral Resource for the Lake Hope Project is based on information announced to the ASX on 19th June 2023. The Company confirms that it is unaware of any new information or data that materially affects the information in the relevant market announcement and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply.
Impact Minerals Ltd Annual Report 2023 9 Review of Operations continued METALLURGY Playa One has developed a novel, relatively low-cost hydro-metallurgical process to convert mineralisation of a type as found on Lake Hope into HPA with the potential to produce a purity exceeding 99.99% (4N HPA), generally taken as the industry standard purity for product comparison. Initial bench-scale metallurgical test work on representative material, process design, flow sheet design, and process engineering studies have been completed, leading to significant breakthroughs in mineral processing technology, including proprietary technologies. Figure 7 illustrates the basic process steps in a simplified schematic flow sheet. Impact’s review of this novel process indicates that together with the unique physical and chemical characteristics of the Lake Hope clays, using the Playa One metallurgical process may offer a breakthrough in HPA production with potentially significant cost advantages compared to the processing of kaolin, which is commonly proposed as a source of ore for HPA and is the subject of several on-going studies by other companies. Figure 7. Schematic flow sheet. These advantages include the following: – the naturally occurring micron-sized particles and relatively homogeneous ore require no comminution, grinding, classification, or wet-dry screening. – a simple wash and filtration circuit for upfront processing. – a low-temperature sulphuric acid leach, a generally readily available and cheaper acid than others. – Eliminating the front-end energy-intensive calcination required in the kaolin process, thus significantly reducing energy costs, the flow sheet complexity and CO2 emissions. – Relatively benign waste products. Optimisation of the processing flow sheet is a key focus of the Pre-Feasibility Study and to be completed by mid-2024. Impact will also own a proportional share of the processing technology by earning an interest directly in Playa One Pty Limited via the incorporated joint venture. The expected relatively low cost of mining also allows for significant optionality for the location of the metallurgical plant, which is likely to be located in one of four main population centres (Figure 2).
10 Impact Minerals Ltd Annual Report 2023 PRODUCTION OF 4N HPA Playa One’s sulphate metallurgical process has successfully produced >99.99% Al2O3 (nominally 4N HPA) with purities of 99.994% to 99.996% in initial assays. As well as the Al2O3 assay (with all other major elements being below detection), total contaminants are about 41 ppm, representing 99.996% alumina (Al2O3) with the primary contaminants being Fe (2.08ppm), K (7.94ppm), Mg (7.23ppm) and Na (6.61ppm). This compares favourably with the purity of other HPA products published in the public domain (Table 3). Review of Operations continued Note: In table 3 assay methods vary between individual data sources, and direct comparisons should be cautiously viewed. Some elements were omitted for brevity and are reported as “Others_ppm”. Total ppm is the sum of all elements reporting above the detection limit. BDL = below the detection limit. NR = Not Reported. Samples of an example precursor product and final calcined HPA produced using the metallurgical process were analysed using SEM and EDS microscopy by RSC Mineral Consultants, Perth, Western Australia. Precursor salts (before calcination) were imaged as agglomerations of micron-sized particles of alumina. The final calcined HPA product was imaged as corundum crystals and fused aggregates up to 200 microns in size (Figure 8). X-Ray diffraction studies have confirmed that the final product is alpha-HPA, the desired form of alumina. It should be noted that the precipitation of the crystals occurred with little or no control over temperature and pressure. In addition, work has yet to be done on refining the final HPA product, for example, jet milling or developing intermediate saleable products that the end-users require. This critical capability needs to be built out by Impact, and this will be another area of focus in the PFS. Figure 8. Backscattered scanning electron micrographs of final calcined alumina showing corundum crystals and nanoparticles (Sample HY11558). PRELIMINARY ECONOMIC CONSIDERATIONS Playa One has completed a high-level review of the mining and chemical processing costs associated with a preferred development concept of the lake clay-sulphate process. Impact has reviewed this concept in detail and has concluded that it represents a possible compelling path forward to production with the potential to be cost‑competitive with existing and proposed HPA operations within Australia and internationally. Impact is completing the work required to produce a Scoping Study to confirm Playa One’s review. This will include the maiden Mineral Resource Estimate. Playa One KRR FYI Element Sulphuric HPA7 5N As 0.69 NR NR Ag NR NR 0.1 B NR NR NR Ba 0.2 0.516 0.5 Ce BDL NR 0.34 Ca 2.57 <0.06 NR Cr 0.7 2.76 5 Co 0.15 0.046 0.1 Cs 0.02 <0.01 0.03 Fe 2.08 6.2 BDL Gd BDL NR 0.01 Ga 2.01 0.809 NR K 7.94 17.4 NR La BDL NR 0.2 Mg 7.23 0.603 NR Mn 2.74 0.138 1 Mo 0.33 0.052 NR Na 6.61 8.59 0 Nb 0.01 3.01 NR Nd NR NR 0.15 Ni 0.11 0.377 BDL P 3.45 1.74 NR Pb 0.76 <0.01 NR Pr BDL NR 0.04 Rb 0.26 <0.01 0.1 Sc BDL NR 0.1 Si 3.05 15.8 4.67 Sm BDL NR 0.02 Sn BDL NR 0.8 Sr 0.2 0.053 0.2 Ti 0.08 0.695 NR U BDL NR 0.01 V 0.01 <0.02 0.3 W BDL NR 0.1 Zn 0.15 0.488 NR Zr BDL NR NR TOTAL 41.35 59.28 13.67 Table 3. Minor element results for Lake Hope HPA compared with results from King River Resources Ltd (ASX:KRR 25th March 2021, 30th April 2021) and FYI Resources Ltd (ASX:FYI 13th March 2019).
Impact Minerals Ltd Annual Report 2023 11 Review of Operations continued ABOUT HIGH PURITY ALUMINA AND THE MARKET FOR ITS PRODUCTS High Purity Alumina is aluminium oxide (“alumina” - Al2O3) with a generally accepted purity that exceeds 99.99%, or “4N” (four nines). HPA has superior physical and chemical properties, such as high brightness, superior hardness, and superior corrosion resistance. It has traditionally found applications in: – LED light bulbs are a significant growth market for HPA as they are substantially replacing incandescent lighting systems because they are sustainable, durable, and safe. – Protective coatings (in powdered form) as an inert, incombustible and non-conductive ceramic filler in electronics applications. – Anode-cathode coatings and separators in lithium-ion batteries. – Phosphor substrate material in plasma displays. – Semiconductor substrates. – A precursor for sapphire glass, optical lenses and specialty ceramics used in high-technology imaging and bio‑medical devices. – Defence and protective uses as a hard, chemically resistant and inert barrier. In addition to the HPA, the final calcined ceramic form of the mineral, various precursor aluminium salts, including sulphates, nitrates, chlorides, and silicates (clays), also have important end-market uses. These uses, which include critical parts of the lithium-ion battery manufacturing process, are summarised in Table 4. Aluminium Chemicals Overview α-Al2O3 Aluminium Oxide • Calcined alumina: HPA. Typical product target 99.99% purity • LEDs, sapphire, LiB, Catalysts, Abrasives Al2(NO3)2.9H2O Aluminium Nitrate • Precursor chemical; Requires 4N to 5N purity • Cathode cementation, stabilisation, electrolyte chemical, etc Alx[OH]y variations Hydroxides • Precursor chemical to alumina; Requires 5N or better • Catalysts, electrolytes, precursor feedstock for HPA Al2Cl6.12H2O Chlorides • Precursor chemical – not traded in bulk; Requires 5N to produce 4N HPA • LiB electrolytes, specialty chemicals Al2[SO4]3 Sulphates • Industrial chemical flocculant, and by-product • Mining by-product used for HPA in China (3N usually) [K,Al]2Si2[OH]5 Silicates • Sourced from granites, sediments • Chemically stable, require2 calcination; Hydrochloric acid route only Table 4. End uses of HPA and precursor chemicals. Growing awareness of ultra-high purity (UHP) intermediate aluminium salts and hydroxides as a revenue opportunity has been shown in ASX releases by Alpha HPA Limited. Impact is exploring its options to product these products as part of the Pre-feasibility Study.
12 Impact Minerals Ltd Annual Report 2023 MARKET FORECAST FOR HPA: DEMAND AND PRICE The consensus amongst analysts and the industry is for 4N HPA and related products to command prices between US$15,000 and US$32,000 per tonne, with a median conservative price assumption of US$20,000 per tonne. These figures are borne out by ongoing sales of small quantities of HPA and precursor products reported by Alpha HPA Limited (ASX: A4N Release 24th February 2023). Although data are scarce, in-house analysis of industry performance indicates a notional cost curve with the bulk of incumbent producers at US$11,000 to US$15,000 per tonne for 4N HPA. New entrants, such as Alpha HPA Limited, who produce HPA from a chemical feedstock, and the kaolin developers are forecasting production at a disruptive cost of US$6,000 to $7,000 per tonne (Figure 9: ASX: A4N Release 7th February 2023 and 17th March 2020). A preliminary review of the economic factors affecting the development of Lake Hope indicates the Project may be cost-competitive with these new hydrometallurgical processes. Figure 9. An indicative cost curve for global HPA production. Note the disruptive nature of the cost of production for new entrants using hydrometallurgical techniques versus the incumbent processes dominated by the Bayer process. Overall annual demand for HPA is predicted to increase from 45,000 to 50,000 tonnes in 2021-22 to about 250,000 tonnes by 2030 (Figure 10). An increase in LED demand will mainly drive this growth together with lithium-ion battery uses, both underpinned by global decarbonisation and electrification initiatives. LED growth has experienced between 13% and 18% Compound Annual Growth Rate (CAGR) over the past ten years, and this is predicted to continue, driven by increased installation capacity of LED’s and increased demand for environmentally friendly lighting in domestic and commercial properties. The fastest-growing end-use demand sector in recent years has been in lithium battery separators, which grew at a CAGR of 26%, reaching 5,000 tonnes in 2018 (latest data available). Continued significant growth is predicted in this market, given the uptake of lithium battery technology. Review of Operations continued $ per kilogram
Impact Minerals Ltd Annual Report 2023 13 Review of Operations continued Figure 10. Forecast growth in HPA demand to 2030 (Commodity Research Unit report 2020). Demand for sapphire glass, although accounting for a relatively small share of the overall market, is also growing at 8% to 10% CAGR. Sapphire glass has precise input tolerances, and a small number of market participants dominates production. In addition, as noted above, other uses for Ultra High Purity precursors are also likely to be realised in the coming years. In the Asia-Pacific region, government funding has fuelled the manufacturing capacity investments for electronic companies, which in turn is expected to fuel the demand for HPA over the next decade. SUMMARY AND NEXT STEPS The unique nature of the Lake Hope deposit, which allows for very low cost, low environmental footprint quarrying, combined with straightforward metallurgical processing, presents a clear path to producing high purity alumina products that command high margins in a global market forecast to expand over the next decade dramatically. As such, the Lake Hope Project presents a compelling opportunity for Impact Minerals and its shareholders. The company will move towards production as quickly as practicable over the next few years. Impact is now working towards the following goals in 2024: – Completion of a Scoping Study. – Baseline environmental studies. – Baseline heritage surveys and continued discussions with the Ngadju First Nations Group, in particular, the application for a Mining Lease. Investors should note that an agreement with the Ngadju Group will be required to gain access for mining. – Lodgement of an application for a Mining Lease. – A Pre-Feasibility Study, to be completed by mid 2024. The Lake Hope Project will become the main focus of Impact’s activities going forward. The PFS and DFS are estimated to cost about $2.5 million over the next two years. This relatively low cost for feasibility studies compared to other more conventional projects will allow exploration to continue at Impact’s other projects.
14 Impact Minerals Ltd Annual Report 2023 Review of Operations continued ABOUT THE MINERAL RESOURCE ESTIMATE AT LAKE HOPE The Lake Hope Project (exploration licence E63/2086) is hosted in the Lake Hope palaeo-valley system within the Yilgarn Craton of Western Australia. The area lies within flat terrain with broad watercourses and dry bed lakes. The landscape also comprises sand dunes up to ~10m height, but with low relief. Vegetation comprises eucalyptus marri scrub to 12m height, heath, and scrub, with significant gum trees around the eastern dune areas, typical for that part of Western Australia. The palaeo-valley lake system is developed primarily upon Archaean granitic basement, with minor amounts of metamorphosed greenstone or sedimentary rocks present in the region as inclusions within the granites. The lake system comprises of a coherent series of evaporite playas up to 10 kilometres across which are partly obscured by aeolian dune systems. The saline playas are sheets of evaporitic deposits composed of aluminous mud kaolin, silica, goethite, halite, gypsum and minor amounts of quartz, feldspar and clay detritus. The alumina mineralisation is essentially an evaporitic lake bed deposit. Dimensions for the two mineral zones are; West Lake : areal extent 1.6 km by 1.6 km with an average thickness from the sampling of 0.95 m, maximum depth is 1.6 m and a surface area of 1.33 Mm2; and, East Lake : areal extent 1.6 km by 0.6 km with an average thickness from the sampling of 0.98 m, maximum depth is 2.0 m and a surface area of 0.76 Mm2. The style of mineralisation and the orebody type indicates that there is a strong horizontal control to the alumina grade and geological continuity, i.e. the mineralisation is flat lying and is exposed at surface. A total of 251 holes have been completed for a total meterage of 264.91m. The drilling consisted of 174 auger holes (for 215.67m) and 77 push tube holes (for 49.24m). A further 47 holes have been assayed but were not included in the mineral resource estimate. A total of 251 and 212 composites, West Lake and East Lake respectively, of nominal 0.5 m length were used to estimate Al2O3 for the mineralised lake sediments. No top cuts were applied to the data due to an absence of extreme values and low coefficients of variation for the modelled element. Auger sample quality is considered good to excellent based on moisture content, whilst the push tube sample quality is considered excellent. All holes were logged visually on 5-10 cm increments for colour, mineralogy, grain size, moisture and stiffness. No downhole surveys were taken as the holes are very short, <2 m, and are vertical. Limited QAQC data has been collected by IPT with results reported as being inconclusive due to insufficient data. The limited data is reported to include nine standards and 15 field duplicate samples. Laboratory performance for standards was acceptable for most major elements, with Loss On Ignition and silica exceeding the published values slightly. Duplicates showed acceptable deviance for 13 of the 15 duplicates (+/- 10%). The drillhole database was reviewed and validated by Impact’s independent database manager prior to provision to HS&C Mineral Consultants for an independent JORC 2012 Mineral Resource Estimation. Interpretation of the drillhole database resulted in the generation of 3D mineral constraining solids on 50 m spaced N-S sections for both lakes. The style of mineralisation and the orebody type indicates that there is a strong horizontal control to the alunite grade and geological continuity, i.e. the mineralisation is flat lying and is exposed at surface. A single mineral zone was defined for each the two deposits using a nominal basal Al2O3 cut-off grade of 20% and the geological logging of aluminous clays (providing the requisite geological control) in conjunction with SiO2, K2O, Fe2O3 and SO3 assay grades plus geological sense e.g. tapering of the mineral zone at the lake margins. A 2D digital plan outline of the two deposits was taken from IPT’s geological mapping (based on an air photograph interpretation) and used to limit the boundary of the mineralisation. Where the base of mineralisation was not necessarily intersected by the drilling, the interpreted basal surface for the mineralisation was extrapolated from nearby drillholes which had reached the base, usually in slightly granitic clay sediment. The top of mineralisation was aligned with the sectional topographic trace from the gridded Lidar data. The Lake Hope Resource has been classified as predominantly Indicated Categoery with approximately 11% Inferred Resources, and has been reported in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2012). Mineral Resources have been classified on the basis of confidence in geological and grade continuity, geological modelling confidence, and limited QAQC.
Impact Minerals Ltd Annual Report 2023 15 Review of Operations continued During the year the following work was completed across the greater Arkun-Beau-Jumbo Project areas (Figure 11). 1. An extensive airborne HELITEM electromagnetic and magnetic survey comprising 920 line kilometres was completed on seven blocks covering the priority soil geochemistry targets identified at Beau and Arkun (Figures 11 and 12). Re-processing and interpretation of the data is underway. 2. Extensive time continues to be spent completing Land Access Agreements with landowners through the Beau and Arkun areas. Nearly 30 agreements have been signed covering most of the Ni-Cu-PGE targets in the northern part of the project area, and negotiations are underway for the remaining targets in the southern part of the area. In general, there has been a very good response from landowners in allowing exploration to commence. 3. As a result of the Land Access Agreements, Impact has completed several campaigns of field checking, soil geochemistry and rock chip sampling across some of the priority targets for Ni-Cu-PGE, with a total of 949 soil samples and 171 rock chip samples collected. Assays are awaited for a further 1000 soil samples. 4. Drill targets have been identified at the Beau Project (ASX Release 18th August 2022). A DGPR survey has also been completed, and this will allow drill hole locations to be finalised. Statutory approvals will then be applied for. This work will further refine areas of interest for follow-up work, including drilling. There is still significant follow-up work to be done on the other targets, which is a priority for Impact going forward. Figure 11. Location of HELITEM survey areas, soil geochemistry surveys that have been received and currently underway. ARKUN PROJECT Ni-Cu-PGM REE Li-Cs-Ta Rb
16 Impact Minerals Ltd Annual Report 2023 Review of Operations continued ABOUT THE ARKUN PROJECT Previous work by Impact across the Arkun and Beau project areas using a proprietary geophysicalgeochemical technology owned by Southern Sky Energy Pty Ltd identified 17 broad areas of interest, principally for Ni‑Cu-PGM mineralisation, for follow‑up work (ASX Release 10th June 2021). Reconnaissance soil geochemistry traverses along gazetted roads and tracks over 15 of these targets, identified 22 more specific targets for both Ni-Cu-PGM mineralisation and, for the first time in the area, lithium-caesiumtantalum pegmatites and Rare Earth Elements (REE). A number of the original targets returned anomalous soil results for more than one style of mineralisation. Targets for both Ni-Cu-PGM and lithium were identified at Beau (ASX Release 21st September 2021). Figure 12. Airborne EM survey blocks (in red) over previous roadside soil geochemistry anomalies for Ni-Cu -PGM, Li-Cs-Ta, REE and Rb (additive Z scores: see ASX Releases 8th March 2022, 27th October 2021 and 21st September 2021 for details).
Impact Minerals Ltd Annual Report 2023 17 Review of Operations continued HORSESHOE REE PROSPECT A significant and large soil geochemistry anomaly for Rare Earth Elements (REE) and called the Horseshoe Prospect, was also identified at Arkun. The anomaly is about 10 kilometres long, up to 2,000 meters wide and comprises both the more valuable Heavy Rare Earth Elements (HREE) and the Light Rare Earth Elements (LREE) (Figure 13 and 14). The anomaly is arcuate and centred around a prominent magnetic low adjacent to a major regional fault visible in regional magnetic data. In addition, it coincides with an elevated potassium response in regional radiometric data (Figure 15). This is interpreted to indicate that the REE may be associated with a zone of potassic alteration related to the immediate contact zone (“Goldilocks zone”) of a weakly magnetic felsic or possibly alkaline/carbonatite intrusion that may have migrated from depth along a major fault. Field checking and rock chip sampling are now required to test this further and help identify specific drill targets. Figure 13. Additive response ratios for Total Rare Earth Elements (TREE) across the greater Arkun-Jumbo-Beau project area, highlighting the Horseshoe anomaly. The linear zones of samples mark the location of previously reported soil geochemistry samples taken on roadside traverses with numerous areas of anomalous REE identified, all requiring detailed follow-up surveys (ASX Releases 27th October 2021 and 8th March 2022).
18 Impact Minerals Ltd Annual Report 2023 Review of Operations continued Figure 14. Summed absolute soil assay values at the Horseshoe Prospect, showing combined anomalism in heavy (HREE ) and light (LREE) rare earth elements. Further details about the soil survey and the calculation of response ratios can be found in ASX Release dated June 1st 2023. The Horseshoe REE Prospect is a new and exciting target area for follow‑up work, including field checking and rock chip sampling. This work will commence in late 2023. Numerous other REE anomalies identified in the previous reconnaissance roadside soil geochemistry have yet to be followed up. Follow-up soil geochemistry surveys are in progress, with about 1,000 samples planned, to test some of these areas and other areas identified as prospective for nickel‑copper-PGM and lithium mineralisation. An interpretation of the nickel-copper-PGM and lithium results from the surveys reported here is still in progress. Impact has also engaged with SensOre (ASX: S3N) to help reprocess the HELITEM data and prospectivity mapping for Nickel and Lithium. They also apply integrated AI/machine learning algorithms to large datasets to fingerprint and “predict” locations for mineral deposits. This data will be synthesised to identify drill targets to complete a maiden drill program in 2024. NEXT STEPS
Impact Minerals Ltd Annual Report 2023 19 Review of Operations continued Figure 15. The Horseshoe REE anomaly (top) showing its relationship to a magnetic low (ellipse) and significant regional structure (red line) in an image of regional magnetic data (middle) and potassium in an image of regional radiometric data (bottom).
20 Impact Minerals Ltd Annual Report 2023 Review of Operations continued Results of the Soil Geochemistry Survey During the year four significant soil geochemistry anomalies were identified at Beau one each for nickel‑copper-PGM and gold‑palladium and two for lithium‑caesium-tantalum. The samples were taken at a spacing of 200 metres by either 200 metres or 400 metres and submitted for the ionic leach method at ALS Laboratories in Perth. The results of the soil geochemistry survey are described below and presented as additive response ratios in Figures 16 to 20. Further details on the survey, the analytical technique and calculation of the response ratios can be found in the ASX Release 15th July 2022. 1. NICKEL-COPPERPALLADIUM-PLATINUMGOLD RESULTS The results for nickel-copperpalladium-platinum, together with spatially associated metals silver, cobalt and gold are shown as additive response ratios on an image of the regional magnetic data in Figure 16. These metals are considered pathfinder metals for many mafic‑associated massive sulphide systems globally (ASX Releases 10th June 2021 and 21st September 2021). One large coherent anomaly that is up to 2.5 km long north-south and 1 km wide with combined responses up to 88 times background has been identified in the north west of the Beau tenement (Figure 16). Particularly strong responses occur along two traverses (Traverse A and B, Figure 17). On Traverse A strong responses in particular for copper-nickelpalladium-cobalt occur at the Figure 16. Combined response ratios for nickel-copper-cobalt-platinum-palladium-silver-goldcobalt plotted on an image of the regional magnetic data (more magnetic units in warmer colours). The main soil anomaly is highlighted and is mostly coincident with rocks of low magnetic response and interpreted as part of a large mafic intrusion. The strong magnetic unit in the northeast is probably a unit of banded iron formation. western end of the traverse in an area where there are numerous loose boulders of layered gabbro (Figure 18). Layered gabbros are mostly found as part of large mafic intrusions that host massive nickel-copper sulphide deposits. Impact is the first company to record such rocks in the area. This is a highly encouraging development and further field checking is required. On Traverse B moderate responses for copper-nickel-cobalt-palladium occur over a broad area of about one kilometre. This area has not been field checked and is also a priority area for follow up work. BEAU Figure 2. Combined response ratios for nickel-copper-cobalt-platinum-palladium-silver-gold-cobalt plotted on an image of the regional magnetic data (more magnetic units in warmer colours). The main soil anomaly is highlighted and is mostly coincident with rocks of low magnetic response and interpreted as part of a large mafic intrusion. The strong magnetic unit in the northeast is probably a unit of banded iron formation. Traverse A Traverse B Figure 2. Combined response ratios for nickel-copper-cobalt-platinum-palladium-silver-gold-cobalt plotted on an image of the regional magnetic data (more magnetic units in warmer colours). The main soil anomaly is highlighted and is mostly coincident with rocks of low magnetic response and interpreted as part of a large mafic intrusion. The strong magnetic unit in the northeast is probably a unit of banded iron formation. Traverse A Traverse B
Impact Minerals Ltd Annual Report 2023 21 Review of Operations continued Figure 17. Stacked bar charts of additive response ratios for Traverse A (top) and Traverse B (bottom). Figure 18. Loose boulder of rhythmically layered gabbro from Traverse A. Such textures occur within many layered mafic intrusions globally that host major metal deposits. Figure 3. Stacked bar charts of additive response ratios for Traverse A (top) and Traverse B (bottom). Traverse A Traverse B
22 Impact Minerals Ltd Annual Report 2023 Review of Operations continued Figure 19. Combined response ratios for gold-palladium-magnesium plotted on an image of the regional magnetic data (more magnetic units in warmer colours) and showing a coherent anomaly about 500 metres in diameter. The elevated magnesium responses show a strong correlation to elevated REE responses. This area has not been field checked. 2. GOLD A discrete gold-palladium-in-soil anomaly about 500 metres in diameter has been identified in the central part of the Beau project (Figure 19). The responses for both metals are moderate and are associated with strong magnesium responses. Although not discussed here, magnesium is strongly correlated with REE elements in the soil geochemistry data and together these suggest the responses may be related to an alkaline intrusion. The area has not been field checked and this is a priority area for further work. 2. GOLD A discrete gold-palladium-in-soil anomaly about 500 metres in diameter has been identified in the central part of the Beau project (Figure 5). The responses for both metals are moderate and are associated with strong magnesium responses. Although not discussed here, magnesium is strongly correlated with REE elements in the soil geochemistry data and together these suggest the responses may be related to an alkaline intrusion. The area has not been field checked and this is a priority area for further work. Figure 5. Combined response ratios for gold-palladium-magnesium plotted on an image of the regional magnetic data (more magnetic units in warmer colours) and showing a coherent anomaly about 500 metres in diameter. The elevated magnesium responses show a strong correlation to elevated REE responses. This area has not been field checked. 3. LITHIUM-CAESIUM-TANTALUM Two large irregular shaped soil anomalies each about 1 kilometre in dimension with modest to strong response ratios for lithium-caesium-tantalum have been identified in the north east and central parts of the Beau project. As well as these three metals, there are also variable responses for the associated metals beryllium and niobium and additive response ratios for all five metals are shown in Figure 6. Particularly strong responses occur on Traverse C (Figure 6 and Figure 7). These five metals commonly form part of a zoned system of pegmatites in a widely used model for exploration for lithium-dominant pegmatites (Figure 8). Responses for the individual metals do vary significantly within the two areas identified, but together the responses are permissive of a large zoned pegmatite system. There are indications of such zonation along Traverse C (Figure 7). Of note, the southern anomaly also partly rings the gold-palladium anomaly, suggesting a possible genetic relationship. Both of the geochemical anomalies occur in areas of poor outcrop and extensive laterite and require detailed field checking and possible infill soil geochemistry samples to better define any possible zonation. Figure 6. Combined response ratios for lithium-caesium-tantalum-beryllium-niobium plotted on an image of the regional magnetic data (more magnetic units in warmer colours). These areas have not been field checked. Traverse C 3. LITHIUM-CAESIUMTANTALUM Two large irregular shaped soil anomalies each about 1 kilometre in dimension with modest to strong response ratios for lithium-caesiumtantalum have been identified in the north east and central parts of the Beau project. As well as these three metals, there are also variable responses for the associated metals beryllium and niobium and additive response ratios for all five metals are shown in Figure 20. Particularly strong responses occur on Traverse C (Figure 20 and Figure 21). These five metals commonly form part of a zoned system of pegmatites in a widely used model for exploration for lithium-dominant pegmatites (Figure 22). Responses for the individual metals do vary significantly within the two areas identified, but together the responses are permissive of a large zoned pegmatite system. There are indications of such zonation along Traverse C (Figure 21). Of note, the southern anomaly also partly rings the gold-palladium anomaly, suggesting a possible genetic relationship. Both of the geochemical anomalies occur in areas of poor outcrop and extensive laterite and require detailed field checking and possible infill soil geochemistry samples to better define any possible zonation. Figure 20. Combined response ratios for lithium-caesium-tantalum-beryllium-niobium plotted on an image of the regional magnetic data (more magnetic units in warmer colours). These areas have not been field checked.
Impact Minerals Ltd Annual Report 2023 23 Review of Operations continued Figure 21. Stacked bar charts of additive response ratios for Traverse C. The elements are plotted in order from bottom to top as per the exploration model and suggest they may be part of a zoned system (Figure 7). Figure 22. Cartoon of a widely used exploration model for zoned pegmatite systems showing a core of beryllium (Be) dominant mineralisation passing outwards to tantalum, niobium, lithium and caesium dominant mineralisation. The results of Impact’s first ever detailed soil geochemistry programmes at Beau and within the greater Arkun-Beau-Jumbo project area has successfully identified four high-priority target areas for further work and cover a wide range of battery and precious metals. The geological terrain, which is very poorly explored, is permissive for significant mineralisation of the types discussed here, and Impact considers the results from its exploration targeting work in this region thus far highly encouraging. It is equally encouraging that Impact’s targeting methodology and exploration workflow exemplified here has returned numerous areas for follow-up work and this augers well for Impact’s other projects throughout the emerging mineral province of Western Australia where the same work flow is being applied (Figure 1). At Beau, follow-up field checking and sampling has also been completed with the aim of prioritising areas for reconnaissance drill traverses as soon as practicable. Access will be restricted for drilling until the harvest period later in the year. This will however allow time for the statutory approvals to be lodged. DISCUSSION AND NEXT STEPS 0 20 40 60 80 100 120 140 515798 515998 516198 516398 516598 516798 516998 517198 Traverse C Be_ppb Cs_ppb Li_ppb Ta_ppb Nb_ppb Sn_ppb W_ppb 0 10 20 30 40 50 60 70 514198 514398 514598 514798 514998 515198 515398 515598 515798 Traverse B Figure 7. Stacked bar charts of additive response ratios for Traverse C. The elements are plotted in order from bottom to top as per the exploration model and suggest they may be part of a zoned system (Figure 7). Figure 8. Cartoon of a widely used exploration model for zoned pegmatite systems showing a core of beryllium (Be) dominant mineralisation passing outwards to tantalum, niobium, lithium and caesium dominant mineralisation. 3. DISCUSSION AND NEXT STEPS The results of Impact’s first ever detailed soil geochemistry programme at Beau and within the greater Ark Beau-Jumbo project area has successfully identified four high-priority target areas for further work and co wide range of battery and precious metals. The geological terrain, which is very poorly explored, is permis for significant mineralisation of the types discussed here, and Impact considers the results from its explora targeting work in this region thus far highly encouraging Traverse C
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