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ITEM 4.
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INFORMATION ON THE COMPANY
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A.
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History and Development of the Company
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Our head office is located at 129 West Trade Street, Suite 1405, Charlotte, North Carolina 28202, United States. Our registered office is located at 28 The Esplanade, Level 9, Perth WA
6000, Australia. The telephone number of our registered office is +(61) 8-9322-6322.
IperionX was originally incorporated in Western Australia as Tao Commodities Limited on May 5, 2017 and changed its name to Hyperion Metals Limited on April 14, 2021, following our
acquisition of HMAPL, which holds the Titan Project, on December 1, 2020, and most recently changed to its current name, IperionX Limited, on February 9, 2022. HMAPL was originally incorporated in Western Australia as Hyperion Metals Pty Ltd
on July 20, 2020 and changed its name to Hyperion Metals (Australia) Limited on April 14, 2021, following its acquisition by the Company. We are subject to the provisions of the Australian Corporations Act.
The SEC maintains an internet site at http://www.sec.gov that contains reports, information statements, and other information regarding issuers that file electronically with the SEC.
We also maintain a web site at www.iperionx.com. The information contained on our website or available through our website is not incorporated by reference into and should not be considered
a part of this annual report on Form 20-F, and the reference to our website in this annual report on Form 20-F is an inactive textual reference only.
Our mission
Our mission is to be a leading developer of U.S.-based sustainable critical mineral and critical material supply chains, to facilitate the global transition towards a circular, low-carbon,
resource efficient and socially inclusive green economy.
IperionX holds an exclusive option to acquire titanium processing technologies with the potential to enable the development of a mineral-to-metal, low-carbon, cost-competitive, high-quality
titanium supply chain, and is rapidly working to expand its titanium metal production. These technologies have demonstrated to be effective means of producing titanium at the pilot scale and have shown the potential to be applied to other
critical minerals as well.
IperionX’s immediate focus is on the commercialization of these Technologies to re-shore the titanium metal and other critical mineral supply chains in North America. To facilitate the
commercialization of these Technologies, the Company has secured a potentially large source of titanium and other critical minerals, including rare earth elements, in Tennessee.
We aim to achieve this mission through a multi-pronged strategy focused on technology, integration, and sustainability.
Titanium metal technologies
Blacksand invented the Technologies at the University of Utah in partnership with the U.S. Department of Energy’s Advanced Research Projects Agency – Energy (ARPA-E) and industry leaders
Boeing and Arconic. By combining the Technologies with wide scale industrial advanced manufacturing capabilities such as Additive Manufacturing (AM)/3D printing, MIM and other methods, there is a compelling market opportunity with the
potential to produce low-carbon spherical titanium powders at a fraction of current costs.
We believe Titanium to be a superior metal to stainless steel and aluminum for a wide range of high-performance applications in the aerospace, medical, space and defense sectors. No metal
has the same combined superior properties of light weight, strength and corrosive resistance as titanium. Only titanium’s historically high cost has held it back from being used in larger consumer markets.
The Technologies offers IperionX the potential to produce US-sourced, circular, low-carbon titanium that costs less and can reduce the carbon emissions of an advanced economy through
replacing inferior metals. The potential exists to apply the Technologies to produce other metals as well.
Blacksand is a materials innovation company founded in 2013 by Dr. Z. Zak Fang, Professor of Materials Science and Engineering of the University of Utah. Blacksand has developed proprietary
and patented technologies to produce low-cost, low carbon spherical and non-spherical titanium and its alloys, stainless-steel powders, and refractory metal alloy powders. Core competencies of Blacksand include expertise on metallic materials
manufacturing processes, especially metal powders synthesis, characterization, processing, sintering, and mechanical properties. Blacksand expertise covers titanium, refractory metals, hard materials, and other specialty alloys.
The patented technology is a potential low-cost, low-carbon titanium powder production process that utilizes hydrogen to destabilize Ti-O, making it possible to turn the reduction of TiO2
with magnesium from thermodynamically impossible to thermodynamically favored. This allows TiO2 to be reduced and deoxygenated directly by magnesium to form TiH2, with low oxygen levels that can meet the needs of the industry. TiH2 can be
further processed to titanium metal through standard industry methods. The patented Hydrogen Assisted Magnesiothermic Reduction (“HAMR”) process reduces the energy intensity and resulting carbon emissions and cost of producing titanium
metals.
The Granulation-Sintering-Deoxygenation (“GSD”) process applies the HAMR technology to a simple process that has the potential to produce spherical titanium powders which can then be used
in 3D printing and additive manufacturing. GSD significantly improves the yield of metal powders compared to traditional gas and plasma atomization techniques and produces a spherical powder with low oxygen, controllable particle size and
excellent flowability.
The Hydrogen Sintering and Phase Transformation (“HSPT”) process is a patented technology that makes it possible to achieve a wrought-like microstructure in Ti-6Al-4V alloy parts without
thermo-mechanical working. We believe the ability to leave out thermo-mechanical processing opens the door for potential production of Ti-6Al-4V parts at a fraction of the cost without compromising performance.
Importantly, with these Technologies the source material can be recycled titanium scrap material. The manufacturing of titanium components and structures can generate a large amount of
titanium machining chips. This ‘scrap’ loss can account for a substantial portion of the weight of complex traditionally milled parts. This scrap titanium can be sorted, cleaned, and prepared for processing as a source material for the GSD
process. This recycling pathway can reduce costs and significantly improve the sustainability of titanium metal manufacturing.
We currently have access to the Technologies through the MSA with Blacksand pursuant to which we and Blacksand will investigate the scale up and commercialization of Blacksand’s HAMR and
GSD patented technologies for the processing of titanium ore or feedstock and the production of titanium metal or alloy products under two statements of work. The MSA and statements of work also grant us with options to enter into license
agreements with Blacksand with respect to the same technologies. Separately, we and Blacksand have entered into the Blacksand Option Agreement whereby Blacksand granted us an exclusive option to purchase 100% of the ownership interests of
Blacksand. If we choose not to exercise our option under the Blacksand Option Agreement, the existing MSA and statements of work will continue which provide us with options to enter into license agreements with Blacksand over the HAMR and GSD
patented technologies and related products, to be applied to certain applications. For more information on our agreements with Blacksand, see “Item 4. Information on the Company—B. Business Overview—Additional Business Information—Potential
Acquisition of Blacksand.”
Critical minerals project
Integration of these Technologies with sustainable, resource efficient material feedstocks could be accomplished (in part) by the development of a U.S.-based titanium mineral supply chain
through the potential future development of IperionX’s 100% interest in the Titan Project in Tennessee, United States.
In addition to any future potential IperionX’s supply from the Titan Project, the Technologies can accept scrap metal feedstocks. The Technologies have demonstrated the effectiveness of
using both mineral and scrap feedstock at the pilot scale and the Company is working to secure additional scrap feedstocks and to potentially develop the Titan Project to secure long-term vertically integrated supply of feedstock for the
Technologies.
The Titan Project covers over 11,000 acres in Tennessee, United States, and is considered prospective for critical minerals including titanium, rare earth elements, zircon, and silica sand.
The Titan Project is located in West Tennessee, a region the Company believes has access to world class infrastructure, with nearby access to excellent roads, rail, river, power and skilled labor.
The Titan Project forms part of a large-scale critical mineralization trend in the physiographical area of the United States known as the Mississippi embayment that contains significant
potential for critical materials including titanium, zirconium and rare earth elements.
We believe that vertical integration with U.S.-based resource operations would be a major competitive advantage for IperionX, providing a potential source of critical mineral feedstock.
On June 30, 2022, we reported the results of the Initial Assessment, which demonstrate the Titan Project’s potential to be a sustainable, low cost and globally significant North American producer of titanium,
rare earths and other low carbon critical minerals needed for advanced U.S. industries such as space, aerospace, electric vehicles and 3D printing, as well as critical defense applications.
Sustainability
We believe the global transition towards the green economy could drive significant increased demand for critical minerals and advanced metals. In particular, we believe high demand could
arise for those minerals and metals needed for the drive to achieve decarbonization via electrification, especially those that enable advanced technologies including titanium and rare earth elements. We believe these raw materials have
historically been produced without a focus on environmental sustainability, resource scarcity, or social equity.
Through the Technologies, utilization of titanium scrap could result in the development of a circular and sustainable titanium metal supply chain. In addition, IperionX’s aim for the
development of the Titan Project (and any future critical mineral operations) would focus on environmental sustainability and improving the well-being of the surrounding communities, setting the standard for future development of similar
critical mineral projects.
Why Titanium?
Titanium is a strong, lightweight metal with ideal properties for broad applications in defense, aerospace, space exploration, transportation and electric vehicles, unmanned vehicles, and
many other advanced manufacturing applications.
We believe titanium has the potential to be a key critical material via its substitution for stainless steel and aluminum. In our opinion, the use of stainless steel or aluminum as
structural metals, whether it be for the structural components in an electric vehicle battery pack, light weighting components to reduce fuel emissions in the transport sector, or the mounting structures in solar arrays, will increase with
the transition to a green economy. We believe the existing production of these metals results in carbon emissions which must be addressed to transition to a net-zero economy.
We believe titanium to be a superior metal to stainless steel and aluminum due to its combined superior properties including high strength-to-weight ratio and excellent corrosion
resistance. In our opinion, only titanium’s historically high production cost has held it back from being widely used in place of stainless steel and aluminum.
Titanium metal manufacturing capacity in the United States from titanium minerals is almost non-existent. As of 2022, the current U.S. titanium metal demand from the aerospace, medical,
space and defense sectors are heavily reliant on international supply chains. We believe these supply chains are not only environmentally and socially unsustainable but are also a threat to U.S. national security given the reliance on
imported titanium feedstocks for use within the U.S. defense sector.
The Technologies have the potential to create a cost-competitive production of low-carbon titanium via scrap-to-metal and mineral-to-metal manufacturing processes within the U.S. The
Company’s strategy would allow for the substitution of titanium metal in numerous applications ranging from aerospace and defense to electric vehicles and transportation. Widespread use of the Company’s titanium would enable a domestic,
closed-loop supply chain, longer product lifetimes and increased product re-usability.
The United States is one of the largest global consumers of titanium metal for aerospace and defense applications and has become highly reliant on titanium feedstock imports to service
these industries. IperionX aims to address this import dependence by developing a domestic supply chain in accordance with manufacturing and extraction industry best practices.
Domestic U.S. Titanium Market
Primary titanium metal is called titanium sponge and is produced from converting titanium minerals via the energy intensive and expensive Kroll process. Titanium products are produced by
melting titanium sponge into semi-finished goods (ingot, billet) which are then used to create final products (wire, plate, bar, sheet).
In the report publicly delivered in July 2021 by the U.S. Department of Commerce Bureau of Industry and Security, The Effect of Imports of Titanium Sponge on The National Security, Congress
noted that it has recognized that titanium sponge is critical to national security by including titanium as a strategic material in the Specialty Metals Clause, with all titanium used in national defense systems directed to be melted or
produced in the United States or a qualifying country.
Titanium was further recognized as essential to U.S. security by the Department of the Interior. In 2018, the Department of the Interior found that the absence of a titanium sponge supply
would have significant consequences for the U.S. economy and national security and added titanium to its List of Critical Minerals.
While the United States was the first nation ever to commercialize titanium sponge production in the 1950s, by 2020 the United States did not have a single large-scale titanium sponge
plant.
The United States now has minimal commercial titanium sponge production capacity (approximately 500 tonnes per annum), a critical material for many U.S. defense systems, including fighter
jets, bombers, attack aircraft, transports and helicopters, with newer aircraft using increased amounts of titanium, shown in the table below.
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Titanium Content in Select U.S. Military Airframes
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Airframe
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Introduction into Service
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% of Titanium Content
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CH-47 Chinook
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1962
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8
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F-15 Eagle
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1976
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10
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F-16 Fighting Falcon
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1978
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7
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F/A-18 Hornet
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1984
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12
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F-22 Raptor
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2005
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39
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V-22 Osprey
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2007
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31
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F-35 Lightning II
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2015
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20
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Military airframes entering service after 2000 have an average 30 percent titanium content; airframes entering service prior to 2000 had an average of just 9 percent.
Source: Arconic Engineered Structures, “World Titanium Trends in Defense”, Presentation at the Titanium USA conference, September 24, 2019
Titanium is frequently deployed in applications which require high strength and low weight, such as the A-10 Thunderbolt II attack aircraft, where a titanium cockpit tub has proved vital to
the safe return of pilots despite heavy damage from enemy ground fire.
Titanium is also extensively used in naval applications due to its excellent anti-corrosion characteristics, as well as army ground vehicles due to its very high strength and light weight.
Currently only Japan, Russia, and Kazakhstan have titanium sponge plants certified to produce aerospace rotating-quality sponge that can be used for aerospace engine parts and other
sensitive aerospace applications. In 2018, Russian and Chinese titanium sponge producers controlled 61% of the world’s titanium sponge production, an increase on their combined 55% share in 2008 and 37% share in 1998. In 2020, Russia and
China’s control of global titanium sponge production had increased to approximately 70%.
Absent domestic titanium sponge production capacity, the United States is completely dependent on imports of titanium sponge and scrap and lacks the surge capacity required to support
defense and critical infrastructure needs in an extended national emergency. IperionX’s potentially closed-loop titanium has the potential to supply additional markets and industries outside of defense. Titanium’s historical high-cost and
high-carbon profile have precluded its use in a variety of other industries including consumer electronics and medical technology – IperionX’s potential low-cost, low carbon titanium supply opens up an array of these potential new
applications.
Given the lack of domestic production capacity, and that the United States no longer maintains titanium sponge in the National Defense Stockpile, U.S. producers of titanium-containing
products including fighter jets, bombers, attack aircraft, transports and helicopters are dependent on non-U.S. sources of titanium. We believe that this dependence presents the possibility that in a national emergency, U.S. titanium
producers would be denied access to imports of titanium sponge and scrap.
In addition to bringing titanium production back to the United States, we believe IperionX’s potential low-cost, low carbon titanium supply opens up an array of potential new applications
including in consumer electronics and medical technology.
Our Strategies
We aim to re-shore U.S. critical mineral supply at reduced carbon intensity through the continued development and growth of the closed-loop advanced metal Technologies and the development
of our critical mineral properties.
Our objective is to create long-term shareholder value through the development, scale up and commercialization of the Technologies, and the potential development of additional critical
metal and material products to support a future-facing, renewable and sustainable economy in the United States.
Additionally, we aim to create long-term, productive jobs for the communities in which we operate, and invest into our communities and ensure that they remain beneficiaries and participants
in our continued growth as a company.
To achieve our stated mission and objectives, we currently have the following business strategies and prospects over the medium to long term:
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Continue to research, investigate, scale-up and commercialize the Technologies to produce titanium metal powders for the stakeholders within defense, space,
aerospace, electric vehicles and additive manufacturing.
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Complete techno-economic evaluations, including providing titanium samples produced using the Technologies for potential customers, to outline material physical
and economic metrics of the development of the Technologies as well as securing long term offtake contracts.
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Continue to investigate potential alternative applications of the Technologies to develop additional value-added metal closed-loop production capabilities,
including zircon and synthetic rutile, and the potential production of rare earth elements.
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Continue to progress Environmental, Sustainability and Corporate Governance (“ESG”) assessments and integration studies to outline material physical and economic
ESG metrics as well as major development milestones and timelines.
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Continue discussions with potential customers and strategic partners for future production and sale of titanium metal products and critical minerals, including, but not
limited to rare earth elements.
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Continue to expand IperionX’s land position in the United States, explore for additional
critical minerals and secure relevant permit and zoning approvals.
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To date, we have only commenced pilot scale production of titanium metal but have not commenced commercial production of any titanium metal, titanium minerals or other minerals, nor have we
identified any ore reserves.
Our Competitive Strengths
We believe that we are well-positioned to successfully execute our business strategies because of the following competitive strengths:
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Patented titanium metal production technologies. We have an exclusive option to acquire Blacksand which holds the exclusive commercial
licensing rights for the patented Technologies to produce low carbon titanium metal and spherical powders developed by Blacksand at the University of Utah with support from ARPA-E.
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Market opportunity that capitalizes on a shift to low carbon metal production. The social and macroeconomic shift to the low carbon production
of metals and a circular economy provides a significant opportunity for IperionX to apply the Technologies and position us to take advantage of a compelling high growth market.
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Ability to recycle existing titanium metal feedstock and titanium metal products in a closed-loop process. The Technologies have demonstrated,
at pilot-scale, to be capable of producing fully recycled titanium metal powders using titanium scrap as feedstock in a closed-loop process, technology that potentially offers lower cost, low carbon titanium metal and powders. See “Item 3. Key Information—D. Risk Factors—Risks Related to our Business—Failure to commercially scale our closed-loop titanium production processes may result in material adverse impacts to, or
failure to achieve, our growth projections”.
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Differentiated and integrated U.S. domestic supply chain. We believe that our integrated business model in the U.S. will allow us to achieve
our objective to provide a domestic end-to-end supply chain of low-cost and low carbon titanium metal for strategic and high value applications including light-weighting for electric vehicles and battery packs as well as broad defense
and light-weighting applications for commercial and military applications.
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Sales of critical minerals. The Titan Project contains titanium minerals that can supply the titanium pigment and metals markets as well as
the Technologies. It also contains significant volumes of other highly valuable critical minerals which may be sold as co-products, including zircon and rare earth elements.
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Strategically located close to existing processing facilities. The Titan Project is strategically located in the southeastern U.S., close to
significant manufacturing capacity, including the Chemours facility in New Johnsonville, Tennessee, one of the world’s largest producers of titanium dioxide.
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Significant existing infrastructure available. The Titan Project’s location enjoys low-cost access to road, rail and water logistics
connecting it to world class manufacturing industries. The Titan Project is also well situated to take advantage of a highly skilled labor force and low-cost renewable baseload grid power.
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First mover in restarting exploration of critical minerals in the West Tennessee area. As a first mover in restarting exploration of critical
minerals in West Tennessee, IperionX aims to develop a strategic, U.S. domestic source of high-quality, low-cost and low carbon titanium metal products and other critical minerals, including rare earths and silica sand. The Titan
Project is located in an area which saw significant historic exploration from the 1950’s to the 1990’s by companies including DuPont, Kerr-McGee Corp., BHP Group, RGC Ltd and Altair International Corp.
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Experienced management team. Our senior management team has significant experience in acquiring, developing, and financing minerals
extraction projects in the United States. They have previously held senior business development, financial, and operational positions at both large, publicly traded extraction companies as well as successful private extraction
operations.
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Customers and Partnerships
IperionX is engaged in a wide range of commercial discussions that are advancing with potential customers, collaborators, and strategic partners interested in titanium metal and products
produced with the Technologies.
Because IperionX is an early-stage company, we do not currently have established marketing or distribution channels or sales contracts. However, we have non-binding memoranda of
understanding related to the development of sales channels for our products with the following companies:
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IperionX has a non-binding Memorandum of Understanding (“MOU”) to potentially establish a partnership with Energy Fuels that aims to build an integrated, all-American rare earths supply chain. The MOU
will evaluate the potential supply of rare earth minerals from the Titan Project to Energy Fuels for value added processing at Energy Fuels’ White Mesa Mill. Rare earths are highly valued as critical materials for magnet production
essential for wind turbines, electric vehicles, consumer electronics and military applications.
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IperionX has a non-binding MOU with Chemours to investigate a potential supply agreement between IperionX and Chemours for up to 50,000 metric tons of ilmenite, 10,000 metric tons of rutile, and 10,000
metric tons of staurolite. Chemours operates one of the largest titanium dioxide plants at its New Johnsonville plant which is located approximately 20 miles from IperionX’s Titan Project in Tennessee.
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IperionX has a non-binding MOU with EOS to accelerate the deployment of the Technologies for the potential production of low-cost, low carbon titanium metal powders. IperionX and EOS have agreed to
negotiate in good faith to enter into definitive agreements to give effect to a partnership that allows IperionX and EOS to work together to advance deployment of spherical and non-spherical titanium metal powders for use in the
additive manufacturing industry.
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IperionX has a non-binding MOU with Mario Pilato BLAT S.A. for the potential supply of zircon products. The MOU contemplates a supply agreement for an initial five-year term on an agreed market-based
pricing methodology for the annual supply of up to 20,000 tonnes of zircon products from IperionX’s Titan Project in Tennessee.
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Competition
IperionX competes with other metals technology, metal, natural resource, and exploration companies in what is a fragmented industry. For now, IperionX represents a small portion in this
sector. Many of our competitors have been in business longer than we have and have established more strategic partnerships and relationships and have greater financial accessibility than we have.
While we compete with other companies in the metals and natural resource space, we believe that there are readily available purchasers of critical materials, including titanium metal,
titanium minerals and rare earth minerals, if they are able to be produced by our business operations. The price of metals and minerals can be affected by a number of factors beyond our control, including:
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Fluctuations in the market prices for critical materials, titanium metal, titanium minerals and rare earth minerals;
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Fluctuating supplies of critical materials, titanium metal, titanium minerals and rare earth minerals;
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Fluctuating demand for critical materials, titanium metal, titanium minerals and rare earth minerals; and
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Metals and extraction activities of others.
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Capital Expenditures
Our capital expenditures amounted to US$2.8 million for fiscal 2022 and US$0.6 million for fiscal 2021 which represents the purchase of exploration and evaluation properties and the
purchase of property, plant, and equipment.
We expense all other exploration and evaluation expenditures when incurred (other than expenditures incurred in the acquisition of the rights to explore, including option payments to
landowners).
If we complete a definitive Feasibility Study for the Titan Project and ultimately make a decision to develop the Titan Project, this will require substantial additional funds, which would
require future debt or equity financings. The Initial Assessment estimates the Titan Project’s initial capital costs to be US$237 million for the construction of the mine, WCP (as defined herein), and MSP (as defined herein), including a 30%
contingency. The intended accuracy of the initial capital cost estimate for the Titan Project is ± 35%.
EXPLORATION RESULTS
Since securing the initial Titan Project land position in late-2020, we have focused on proving the Titan Project’s potential. We have conducted multiple drilling programs at the Titan
Project, comprising more than 300 drill holes totaling more than 10,000 meters drilled during the fiscal periods ended June 30, 2021 and 2022. On June 30, 2022, we reported the results of the Initial Assessment on the Titan Project, which
demonstrate the Titan Project’s potential to be a sustainable, low cost and globally significant North American producer of titanium, rare earths and other low carbon critical minerals needed for advanced U.S. industries such as space,
aerospace, electric vehicles and 3D printing, as well as critical defense applications. We also believe the results suggest that there is a significant potential to grow production and the Titan Project’s life in the future. The Initial
Assessment, which adhered to the guidelines in Subpart 1300 of Regulation S-K, considered mining, processing, metallurgical, infrastructure, economic, marketing, legal, environment, social and government factors.
However, we remain an exploration stage minerals extraction company, and we have declared no reserves as defined under Subpart 1300 standards. See “Item 4. Information on the Company—D.
Property, Plant and Equipment” for additional information relating to the Titan Project, including the relevant exploration results, which information is incorporated by reference.
EXPLORATION AND DEVELOPMENT PLANS
We are required by ASX Listing Rules to report ore reserves and mineral resources in Australia in compliance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the JORC Code 2012 Edition) prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). In
contrast, the SEC generally requires disclosure of extraction reserves in accordance with Regulation S-K, Subpart 1300. We are an exploration stage minerals extraction company, and we have no reserves as defined under Subpart 1300 standards.
See “Cautionary Note to United States Investors.”
On June 30, 2022, we reported the results of the Initial Assessment. Over the next twelve months we have plans to undertake further drilling to expand and increase confidence in Titan
Project deposit, as well as further metallurgical testwork, hydrology and geotechnical studies, and economic studies to assess the economic potential of the Titan Project and define a critical minerals reserve base.
In addition to the Initial Assessment, we may undertake additional technical studies, including pre-feasibility and/or feasibility studies. These additional studies will also adhere to the
guidelines in Subpart 1300 of Regulation S-K. If we complete all technical studies (and all necessary permitting activities), we may then undertake minerals extraction and processing activities. However, we currently do not have detailed
plans for any component of the exploration and development plans.
Subject to market conditions and the ability to define an economically viable critical minerals deposit, our separate business plan for the Titan Project is to become a strategic, U.S.
domestic source of high-quality and sustainable titanium and other critical mineral feedstocks, including rare earths, to the United States. The titanium minerals could form an important sustainable feedstock for the Technologies and assist
in the scale up of the Technologies to meet potential future market demand. We believe that vertical integration with U.S.-based resource operations is a major competitive advantage for IperionX, providing a potential source of critical
mineral feedstock.
We plan to effect our business plan for the Titan Project by:
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completing our exploration drilling program on initial land position and continuing to secure additional land leases to undertake additional exploration;
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undertaking necessary technical studies to assess the economic potential of the Titan Project and defining a critical minerals reserve base;
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completing required permitting and zoning activities;
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undertaking discussions with potential customers for future sale of titanium and other critical minerals, including rare earths;
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completing required financing activities;
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completing construction of the Titan Project’s minerals extraction and processing facilities; and
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commencing minerals extraction and processing activities to supply the United States demand for clean, low-cost domestic sources of titanium and other critical minerals, including rare earths.
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ADDITIONAL BUSINESS INFORMATION
Potential Acquisition of Blacksand
IperionX and Blacksand entered into the Blacksand Option Agreement in October 2021 whereby Blacksand granted IperionX an exclusive option to purchase 100% of the ownership interests of
Blacksand. The option period terminates upon the earliest to occur of (i) the closing of the purchase of Blacksand, (ii) termination of the existing Blacksand Research Agreement, (iii) December 31, 2022, or (iv) the termination of the
Blacksand Option Agreement, which may be terminated by IperionX at any time for any reason upon 60 days’ notice to Blacksand or by either party if there is a breach, inaccuracy in, or failure to perform any representation, warranty, covenant
or agreement made by the other party pursuant to the Blacksand Option Agreement and such breach, inaccuracy, or failure has not been cured by the other party within 30 days’ of receipt of written notice of such breach.
Separately, IperionX and Blacksand also have the MSA in place pursuant to which IperionX and Blacksand will investigate the scale up and commercialization of Blacksand’s HAMR and GSD
patented technologies for the processing of titanium ore or feedstock and the production of titanium metal or alloy products under two statements of work. Under the first statement of work (“SOW 1”), Blacksand provides research and
development services to investigate the scale up and commercialization of the HAMR technology for a cost of US$480,000. The term of SOW 1 ends on the earlier of (i) termination of the MSA or (ii) the completion of the research and development
program. Under the second statement of work (“SOW 2”), Blacksand provides research and development services to investigate the scale up and commercialization of the GSD technology for a cost of US$1,200,000. The term of SOW 2 ends on the
earliest of (i) termination of the MSA, (ii) the completion of the research and development program or (iii) June 1, 2023. The MSA continues until terminated (a) by IperionX at any time for any reason upon 90 days’ notice to Blacksand or (b)
by either party if there is a breach of the MSA by the other party and such breach has not been cured by the other party within 15 days’ of receipt of written notice of such breach.
While the Blacksand Option Agreement (detailed above) gives IperionX exclusive rights to develop Blacksand’s patented technologies, including the HAMR and GSD patented technologies and
related products, the MSA separately grants IperionX with options to enter into license agreements with Blacksand with respect to the same technologies. If IperionX exercises the option to license the HAMR technology, it will pay total
license fees to Blacksand of US$1.9 million over a two-year period. From the third anniversary of the option exercise, IperionX will pay Blacksand the greater of the minimum annual license payment (between US$150,000 and US$250,000) and a
royalty of 3% of the net value of licensed product sold. If IperionX exercises the option to license the GSD technology, it will pay total license fees to Blacksand of US$3 million over a two-year period. From the third anniversary of the
option exercise, IperionX will pay Blacksand the greater of the minimum annual license payment (between US$250,000 and US$500,000) and a royalty of 5% of the net value of licensed product sold. The options to enter into license agreements can
be exercised by IperionX at any time during the term of the MSA.
Blacksand holds the exclusive commercial licensing rights for more than forty global patents through a license agreement with the University of Utah (“UoU License Agreement”) including the
global patents for the patented HAMR and GSD technologies that can produce low-cost and low carbon titanium metal. The License Agreement grants Blacksand a royalty bearing exclusive license to commercialize the intellectual property that
Blacksand developed in conjunction with the University of Utah. The UoU License Agreement automatically continues unless one of the parties terminates. IperionX will be able to apply this patent and technology platform across a wider range of
advanced metal alloys and powders for markets including space, aerospace, electric vehicles and 3D printing and additive manufacturing.
If IperionX chooses to exercise its option under the Blacksand Option Agreement, IperionX will: (i) pay US$12,000,000 to Blacksand and its members, of which the Company can elect to pay an
amount (between 22.5% to 30%) in shares of the Company (based on a share price equal to 75% of the 10-day VWAP of IperionX shares on ASX immediately preceding the closing date, subject to a floor of A$0.85 and a ceiling of A$3.00), subject to
IperionX obtaining shareholder approval; (ii) commit to invest US$1,000,000 over a 3 year period towards the establishment of an endowed chair professorship at the University of Utah, which shall be used to support research and development
related to Blacksand and IperionX, and other related technologies in the field of titanium, critical metals, and minerals; and (iii) pay the Blacksand members a royalty equal to 0.5% of cumulative net sales that relate to Blacksand assets or
properties above US$300,000,000.
If IperionX chooses not to exercise its option under the Blacksand Option Agreement, the existing MSA and statements of work will continue which provide IperionX with options to enter into
license agreements with Blacksand over a suite of patents, including the HAMR and GSD patented technologies and related products, to be applied to certain applications.
Acquisition of the Titan Project
Following its acquisition of HMAPL in December 2020 (the “Acquisition”), IperionX holds a 100% interest in the Titan Project, covering over 11,000 acres of critical minerals properties in
Tennessee, United States, considered prospective for critical minerals including titanium, rare earth elements, silica sand and zircon. The Titan Project is located in West Tennessee and we believe the Titan Project has access to world class
infrastructure, with nearby access to excellent roads, rail, river, power and skilled labor. Mineral sands projects operational costs are heavily influenced by electricity and labor costs.
Since securing the initial Titan Project land position in late-2020, IperionX has successfully focused on proving the Titan Project’s potential. We have completed multiple drilling programs
at the Titan Project, confirming consistent grade and thickness of critical minerals mineralization over approximately 2 miles of strike. Assays from all holes of the first two drilling programs and the first batch of the third program have
returned thick zones of high-grade total heavy minerals near surface.
The Company completed its acquisition of HMAPL after issuing 26,500,000 ordinary shares, 5,000,000 unlisted options, 8,000,000 performance options and 36,000,000 performance shares in the
Company to the vendors, following shareholder approval received at the Company’s general meeting of shareholders held on November 30, 2020. As a result of the acquisition, the former shareholders of HMAPL effectively obtained control of the
combined entity. Accordingly, using the reverse acquisition principles of the business combination accounting standard, while the Company is the legal acquirer of HMAPL, for accounting purposes HMAPL is deemed to be the acquirer of the
Company. Therefore, the consolidated financial statements of the Company have been prepared as a continuation of the consolidated financial statements of HMAPL. The deemed acquirer, HMAPL, has accounted for the acquisition of the Company from
December 1, 2020. In addition, at the date of the transaction, it was determined that the Company was not a business. Accordingly, for accounting purposes, the acquisition has been treated as a share-based payment transaction. As a result of
the reverse acquisition, during the prior fiscal 2021 period, the combined entity recognized an expense of US$5.1 million in its statement of profit or loss and other comprehensive income, effectively representing the cost of listing on the
ASX. The cost is calculated as the difference in the fair value of the equity instruments that HMAPL is deemed to have issued to acquire the Company and the fair value of the Company’s identifiable net assets.
GOVERNMENTAL REGULATIONS
U.S. Securities Regulations
Emerging Growth Company Status
We are an “emerging growth company” under the U.S. Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and will continue to qualify as an “emerging growth company” until the
earliest to occur of:
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the last day of the fiscal year during which we have total annual gross revenues of US$1,070,000,000 (as such amount is indexed for inflation every five years by the SEC) or more;
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•
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June 30, 2027, being the last day of our fiscal year following the fifth anniversary of the completion of our first sale of common equity securities
pursuant to an effective annual report under the Securities Act;
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the date on which we have, during the previous three-year period, issued more than US$1,070,000,000 in non-convertible debt; or
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the date on which we are deemed to be a “large accelerated filer”, as defined in Rule 12b-2 of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market
value of our ordinary shares and ADSs that are held by non-affiliates exceeds US$700,000,000 as of the last day of our most recently completed second fiscal quarter.
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An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable to public companies in the United States. Generally, a company
that registers any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act, a management report on internal control over financial
reporting and an auditor attestation report on management’s assessment of the company’s internal control over financial reporting. However, for so long as we continue to qualify as an emerging growth company, we will be exempt from the
requirement to include an auditor attestation report in our annual reports filed under the Exchange Act. In addition, Section 103(a)(3) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, has been amended by the JOBS Act, to provide
that, among other things, auditors of an emerging growth company are exempt from any rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor
would be required to provide additional information about the audit and the financial statements of the company.
For information on the risks that accompany our status as an emerging growth company, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs—We are an emerging growth
company, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies may make the ADSs less attractive to investors and, as a result, adversely affect the price of the ADSs and result in a less
active trading market for the ADSs.”
In the event that we cease to qualify as an emerging growth company, we will still be exempt from certain rules under the Exchange Act as a foreign private issuer, as described immediately
below.
Foreign Private Issuer Status
We are also considered a “foreign private issuer” pursuant to Rule 405 under the Securities Act. As a foreign private issuer, we are exempt from certain rules under the Exchange Act that
impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing”
profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our ordinary shares or ADSs. Moreover, we are not required to file periodic reports and financial
statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD (Fair Disclosure), which restricts the
selective disclosure of material information.
Nasdaq also allows us a foreign private issuer to elect to follow certain home country laws instead of Nasdaq practices applicable to U.S. companies. In particular, we follow home country
law instead of Nasdaq practice regarding:
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Nasdaq’s requirement that our independent directors meet regularly in executive sessions. The ASX Listing Rules and the Corporations Act do not require the independent directors of an Australian company
to have such executive sessions and, accordingly, we have claimed this exemption.
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Nasdaq’s requirement that an issuer provide for a quorum as specified in its bylaws for any meeting of the holders of ordinary shares, which quorum may not be less than 33 1/3% of the outstanding shares
of an issuer’s voting ordinary shares. In compliance with Australian law, our Constitution provides that two shareholders present shall constitute a quorum for a general meeting.
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Nasdaq’s requirement that issuers obtain shareholder approval prior to the issuance of securities in connection with certain acquisitions, changes of control or private placements of securities, or the
establishment or amendment of certain stock option, purchase or other compensation plans. Applicable Australian law and rules differ from Nasdaq requirements, with the ASX Listing Rules providing generally for prior shareholder
approval in numerous circumstances, including (i) issuance of equity securities exceeding 15% (or an additional 10% capacity to issue equity securities for the proceeding 12-month period if shareholder approval by special resolution
is sought at the Company’s annual general meeting) of our issued share capital in any 12-month period (but, in determining the available issue limit, securities issued under an exception to the rule or with shareholder approval are
not counted), (ii) issuance of equity securities to related parties (as defined in the ASX Listing Rules) and (iii) directors or their associates acquiring securities under an employee incentive plan.
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For as long as we are a “foreign private issuer” we intend to file our annual financial statements on Form 20-F and furnish our semi-annual financial statements and quarterly updates on
Form 6-K to the SEC for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Exchange Act. However, the information we file or furnish is not the same as the information that is required in annual and
quarterly reports on Form 10-K or Form 10-Q for U.S. domestic issuers. Accordingly, there may be less information publicly available concerning us than there is for a company that files as a domestic issuer.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We are required to determine our status as a foreign private issuer on an annual
basis at the end of our second fiscal quarter. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies:
(1) the majority of our executive officers or directors are U.S. citizens or residents; (2) more than 50% of our assets are located in the United States; or (3) our business is administered principally in the United States. Since more than
50% of our assets are located in the United States, we will lose our status as a foreign private issuer if more than 50% of our outstanding voting securities are held by U.S. residents as of the last day of our second fiscal quarter in any
year.
For information on the risks that accompany our status as a foreign private issuer, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs—As a foreign private issuer, we
are permitted to file less information with the SEC than a domestic issuer” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs—We may lose our foreign private issuer status, which would then require us to comply with the
Exchange Act’s domestic reporting regime and cause us to incur additional legal, accounting and other expenses.”
U.S. Environmental, Health and Safety Laws
IperionX’s business operations, including the Technologies and the Titan Project, will be required to comply with applicable environmental protection laws and regulations and licensing and
permitting requirements. The material environmental, health and safety laws and regulations that we must comply with include, among others, the following United States federal laws and regulations:
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National Environmental Protection Act (“NEPA”), which requires careful evaluation of the environmental impacts of extraction operations that require federal approvals;
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Clean Air Act (“CAA”) and its amendments, which governs air emissions;
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Clean Water Act (“CWA”), which governs discharges to and excavations within the waters of the United States;
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Safe Drinking Water Act (“SDWA”), which governs the underground injection and disposal of wastewater;
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Resource Conservation and Recovery Act (“RCRA”), which governs the management of solid waste;
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Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability where hazardous substances have been released into the environment (commonly known as
Superfund); and
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Federal Mine Safety and Health Act, which established the primary safety and health standards regarding working conditions of employees engaged in extraction, related operations, and preparation and
milling of the minerals extracted, as well as the Occupation Safety and Health Act, which regulates the protection of the health and safety of workers to the extent such protection is not already addressed by the Federal Mine Safety
and Health Act.
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Our operations may also be subject to state environmental law and regulations, including but not limited to laws and regulations related to the reclamation of mined lands, which may require
reclamation permits to be acquired prior to the commencement of minerals extraction operations and may require substantial financial guarantees to cover the cost of future reclamation activities.
Solid and Hazardous Waste
RCRA, and comparable state statutes, affect our operations by imposing regulations on the generation, transportation, treatment, storage, disposal and cleanup of hazardous wastes and on the
disposal of non-hazardous wastes. Under the auspices of the United States Environmental Protection Agency (“EPA”), the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent
requirements.
In addition, the federal Superfund law can impose joint and several liability without regard to fault or legality of conduct on classes of persons who are statutorily responsible for the
release of a hazardous substance into the environment. These persons can include the current and former owners, lessees or operators of a site where a release occurs, and anyone who disposes or arranges for the disposal of a hazardous
substance. Under CERCLA, such persons may be subject to strict, joint and several liability for the entire cost of cleaning up hazardous substances that have been released into the environment and for other costs, including response costs,
alternative water supplies, damage to natural resources and for the costs of certain health studies. Moreover, it is not uncommon for neighboring landowners, workers and other third parties to file claims for personal injury and property
damage allegedly caused by hazardous substances released into the indoor or outdoor environment. Each state also has environmental cleanup laws analogous to CERCLA. Hazardous wastes may have been previously handled, disposed of, or released
on or under properties currently or formerly owned or leased by us or on or under other locations to which we sent waste for disposal. These properties and any materials disposed or released on them may subject us to liability under CERCLA,
RCRA and analogous state laws. Under such laws, we could be required to remove or remediate disposed wastes or property contamination, to contribute to remediation costs, or to perform remedial activities to prevent future environmental harm.
Air Emissions
The federal CAA and comparable state laws restrict the emission of air pollutants from numerous sources through the issuance of permits and the imposition of other requirements. Major
sources of air pollutants are subject to more stringent, federally imposed permitting requirements. Air pollution regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities
expected to produce or significantly increase air emissions, obtain air permits and comply with stringent permit requirements or utilize specific equipment or technologies to control emissions of certain pollutants. The need to obtain permits
has the potential to delay our operations, and we may be required to incur capital expenditures for air pollution control equipment or other air emissions related obligations. Administrative enforcement actions for failure to comply strictly
with air pollution regulations or permits are generally resolved by payment of monetary fines and correction of any identified deficiencies. Alternatively, regulatory agencies could require us to forego construction, modification or operation
of certain air emission sources.
Climate Change
Numerous regulatory initiatives have been enacted, and are likely to continue to be developed, at the international, national, regional and state levels of government to monitor and limit
existing emissions of greenhouse gases (“GHGs”) as well as to restrict or eliminate such future emissions. At the federal level, in December 2009, the EPA determined that emissions of carbon dioxide, methane and other GHGs endanger public
health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. Based on these findings, the EPA began adopting and implementing regulations
to restrict emissions of GHGs under existing provisions of the CAA.
President Biden and the Democratic Party, which now controls the U.S. Congress, have identified climate change as a priority, and it is expected that new executive orders, regulatory action
and/or legislation targeting greenhouse gas emissions, or prohibiting or restricting oil and gas development activities in certain areas, will be proposed and/or promulgated during the Biden Administration.
Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and a number of state and regional efforts have emerged that are aimed at tracking and/or
reducing GHG emissions by means of cap-and-trade programs. Cap and trade programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs. Further, the United States has
rejoined the Paris Agreement and has committed to reduce U.S. GHG emissions by up to 52% by 2030. The adoption of legislation or regulatory programs or other government action to reduce emissions of GHGs could require us to incur increased
operating costs.
Clean Water Act
The CWA imposes restrictions and strict controls regarding the discharge of wastes, including mineral processing wastes, into waters of the United States, a term broadly defined to include,
among other things, certain wetlands. Permits must be obtained to discharge pollutants into federal waters. The CWA provides for civil, criminal and administrative penalties for unauthorized discharges, both routine and accidental, of
pollutants. It imposes substantial potential liability for the costs of removal or remediation associated with discharges of oil or hazardous substances. State laws governing discharges to water also provide varying civil, criminal and
administrative penalties, and impose liabilities in the case of a discharge of petroleum or its derivatives, or other hazardous substances, into state waters. In addition, the EPA has promulgated regulations that require permits to discharge
storm water runoff, including discharges associated with construction activities. In the event of an unauthorized discharge of wastes, we may be liable for penalties and costs.
Pursuant to these laws and regulations, we may also be required to develop and implement spill prevention, control and countermeasure plans, also referred to as “SPCC plans,” in connection
with on-site storage of significant quantities of oil. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions. The CWA also prohibits the discharge of
fill materials to regulated waters including wetlands without a permit from the USACE.
In May 2015, the EPA issued a final rule that attempted to clarify the federal jurisdictional reach over waters of the United States, but the agency repealed this rule in September 2019 and
replaced it with the Navigable Water Protection Rule in April 2020, which narrowed federal jurisdictional reach relative to the 2015 rule. The repeal and replacement of the 2015 rule is currently subject to litigation and the scope of the
jurisdictional reach of the Clean Water Act may therefore remain uncertain for several years, with a patchwork of legal guidelines applicable to various states potentially developing. We could face increased costs and delays with respect to
obtaining permits for dredge and fill activities in wetland areas to the extent they are required.
Underground Injection Control Permits
The federal SDWA creates a nationwide regulatory program protecting groundwater. This act is administered by the EPA. However, to avoid the burden of dual federal and state (or Indian
tribal) regulation, the SDWA allows for the Underground Injection Control (“UIC”) permits issued by states (and Indian tribes determined eligible for treatment as states) to satisfy the UIC permit required under the SDWA under two conditions.
First, the state’s program must have been granted primacy. Second, the EPA must have granted, upon request by the state, an aquifer exemption. The EPA may delay or decline to process the state’s application if the EPA questions the state’s
jurisdiction over the mine site. Permits must be obtained before developing and using deep injection wells for the disposal or storage of produced fluids, and well casing integrity monitoring must be conducted periodically to ensure the well
casing is not leaking produced fluids to groundwater. Contamination of groundwater by natural gas and oil drilling, production and related operations may result in fines, penalties, remediation costs and natural resource damages, among other
sanctions and liabilities under the SDWA and other federal and state laws. In addition, third-party claims may be filed by landowners and other parties claiming damages for groundwater contamination, alternative water supplies, property
impacts and bodily injury.
NEPA
NEPA requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment. The NEPA process involves public input through comments which
can alter the nature of a proposed project either by limiting the scope of the project or requiring resource-specific mitigation. NEPA decisions can be appealed through the court system by process participants. This process may result in
delaying the permitting and development of projects or increase the costs of permitting and developing some facilities.
Endangered Species Act
The federal Endangered Species Act (“ESA”) restricts activities that may affect endangered and threatened species or their habitats. Some of our operations may be located in areas that are
designated as habitats for endangered or threatened species. A critical habitat designation could result in further material restrictions to federal and private land use and could delay or prohibit land access or development. The United
States Fish and Wildlife Service continues its effort to make listing decisions and critical habitat designations where necessary. The ESA has not previously had a significant impact on our operations. However, the designation of previously
unprotected species as being endangered or threatened could cause us to incur additional costs or become subject to operating restrictions in areas where the species are known to exist.
Environmental, Social and Governance
During fiscal 2021, IperionX engaged Presidio Graduate School’s expert consulting division, PGS Consults to commence an Environmental, Sustainability and Corporate Governance (“ESG”)
assessment and subsequent integration study. PGS Consults is housed in Presidio Graduate School, the country’s first and only independent graduate school focused entirely on sustainability and social justice, with corporate clients including
HP Inc., Flex Ltd., Granite Construction, Thermo Fisher Scientific and Domaine Chandon.
PGS Consults will undertake a materiality assessment, a life cycle assessment and create a playbook for ESG leadership. The review and assessment will identify priority ESG focus areas,
highlight key ESG recommendations, and deliver an actionable life cycle assessment. PGS Consults will conduct the study in accordance with Global Reporting Initiative, UN Sustainable Development Goals, and Task Force on Climate-Related
Financial Disclosures standards. The ESG integration study will outline material physical and economic ESG metrics as well as major development milestones and timelines. The study will be completed in the second half of 2022.
Extraction Permits and Approvals
We currently have permits authorizing the exploration drilling activities with respect to the Titan Project. We are required to obtain governmental permits for some of our exploration
activities and may be required to renew the permits we already have. Prior to developing or extracting any mineralization that we discover, we will be required to obtain new governmental permits authorizing, among other things, any site
development activities and site operating activities. Obtaining and renewing governmental permits is a complex and time-consuming process and involves numerous jurisdictions. public hearings and possibly costly undertakings. The timeliness
and success of permitting efforts are contingent upon many variables not within our control, including the interpretation of permit approval requirements administered by the applicable permitting authority. We may not be able to obtain or
renew permits that are necessary to our planned operations or the cost and time required to obtain or renew such permits may exceed our expectations. Any unexpected delays or costs associated with the permitting process could delay the
exploration, development or operation of our properties.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Regulatory and Industry Matters—We will be required to obtain governmental permits in order to conduct development and minerals
extraction operations, a process which is often costly and time-consuming.”
Our exploration operations are subject to extensive laws and regulations, which are overseen and enforced by multiple U.S. federal, state and local authorities. These laws govern
exploration, development, production, exports, various taxes, labor standards, occupational health and safety, waste disposal, protection and remediation of the environment, protection of endangered and protected species and other matters.
Mineral exploration operations are also subject to U.S. federal and state laws and regulations that seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from
government bodies are required for drilling operations to be conducted, and we cannot assure you such permits will be received. Environmental laws and regulations may also, among other things:
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Require notice to stakeholders of proposed and ongoing operations.
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Require the installation of pollution control equipment.
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Restrict the types, quantities and concentration of various substances that can be released into the environment in connection with minerals extraction or drilling activities.
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Limit or prohibit extraction or drilling activities on lands located within wetlands, areas inhabited by endangered species and other protected areas, or otherwise restrict or prohibit activities that
could impact the environment, including water resources.
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Impose substantial liabilities for pollution resulting from current or former operations on or for any preexisting environmental impacts at the Titan Project site.
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Require preparation of an Environmental Assessment or an Environmental Impact Statement.
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As of the date hereof, other than with respect to the acquisition of the Titan Project and related permitting activities, we have not been required to spend material amounts on compliance
with environmental regulations. However, compliance with these laws and regulations may impose substantial costs on us, subject us to significant potential liabilities, and have an adverse effect upon our capital expenditures, results of
operations or competitive position. Violations and liabilities with respect to these laws and regulations could result in significant administrative, civil, or criminal penalties, remedial clean-ups, natural resource damages, permit
modifications or revocations, operational interruptions or shutdowns and other liabilities. The costs of remedying such conditions may be significant, and remediation obligations could adversely affect our business, results of operations and
financial condition. Additionally, Congress and federal and state agencies frequently revise environmental laws and regulations, and any changes in these regulations or the interpretations thereof could require us to expend significant
resources to comply with new laws or regulations or changes to current requirements and could have a material adverse effect on our business operations.
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C.
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Organizational Structure
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The following reflects our organizational structure. All our subsidiaries are wholly-owned.
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D.
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Property, Plant and Equipment
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Titan Project
Overview
IperionX holds a 100% interest in the Titan Project, covering over 11,000 acres of critical minerals properties in Tennessee, United States, considered prospective for critical minerals
including titanium, rare earth elements, silica sand and zircon.
The Titan Project is located in west Tennessee and we believe the Titan Project has access to world class infrastructure, with nearby access to excellent roads, rail, river, power and
skilled labor. We believe mineral sands projects operational costs are heavily influenced by electricity and labor costs.
At June 30, 2022, the book carrying value of the Titan Project was US$2,431,229. See note 6 to our audited consolidated financial statements for the fiscal period ended June 30, 2022 for
further details.
The Titan Project is located in an area which saw significant historic exploration from the 1950’s to the 1990’s by companies including DuPont, Kerr-McGee Corp., BHP Group, RGC Ltd and
Altair International Corp. The Titan Project is also strategically located in the southeast of the United States, close to significant manufacturing capacity, including the Chemours facility in New Johnsonville, one of the world’s largest
producers of titanium dioxide.
Geology and geological interpretation
The Titan Project’s location in western Tennessee represents the eastern flank of the Mississippi embayment, a large, southward plunging syncline within the Gulf Coastal Plain. This feature
extends from southern Illinois to the north and to Mississippi and Alabama to the south. The embayment is filled with sediments and sedimentary rocks of Cretaceous to Quaternary age.
The McNairy Sand Formation represents a pro-grading deltaic environment during a regressive sequence. This is evidenced by the coarsening upward sequence grading from the glauconitic clay
rich Coon Creek Formation to the fine lower member of the McNairy Formation to the coarser upper member of the McNairy Formation.
Mineralization at the Titan Project resides primarily in two zones within the primary McNairy Sand Formation. The main mineralized zone at the ‘Benton’ deposit is hosted stratigraphically
in the lower member of the McNairy Formation. Mineralization averages 31 meters thick and has been traced, to date, for approximately 6 kilometers along strike at the Benton deposit.
The ‘Camden’ deposit represents the up-dip extension of the lower portion of the McNairy Sand formation encountered at the Company’s Benton deposit. The McNairy Sand dips gently to the west
and the Camden deposit represents the most easterly outcrop of this formation.
Drilling and exploration
Since securing the initial Titan Project land position in late-2020, we have focused on proving the Titan Project’s potential. We have conducted multiple drilling programs at the Titan
Project, comprising more than 300 drill holes totaling more than 10,000 meters drilled during fiscal 2021 and fiscal 2022.
Our drilling was initially focused on our core property area covering approximately 3,675 acres, which we designated as the ‘Benton’ deposit. To date we have drilled 136 holes for a total
of 5,428 meters at the Benton deposit. Drill assays received to-date at the Benton deposit have returned thick zones of high-grade total heavy minerals (“THM”) near surface.
The drilling results at the Benton deposit highlight a consistent grade and thickness of mineralization averaging 31 meters thickness, and to-date has been traced for approximately 6
kilometers along strike. The mineralization appears to occur as a single, large, and coherent near-surface deposit.
In addition to the Benton deposit, exploration drilling at other properties within the Titan Project, located approximately 4 kilometers southeast of the Benton deposit, has indicated
additional near surface, high-grade mineralization. We have designated this new discovery as the ‘Camden’ deposit. The Camden deposit represents the up-dip extension of the lower portion of the McNairy Sand formation encountered at the Benton
deposit.
Mineral resources
The mineral resource figures presented herein are estimates based on information available at the time of calculation. A “mineral resource” is a concentration or occurrence of solid
material of economic interest in or on the earth’s crust in such form, grade, or quality and quantity that there are reasonable prospects for economic extraction. The location, quantity, grade or quality, continuity and other geological
characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. The reference point for mineral resources is in situ. Mineral resources are subdivided in order of
increasing geological confidence into inferred, indicated and measured categories. Metric tons of mineral resources containing total heavy minerals (“THM”), included in the indicated, and inferred resources, are those contained prior to
losses during metallurgical treatment. The terms “measured resource”, “indicated resource”, and “inferred resource” mean the part of a mineral resource for which quantity and grade or quality are estimated on the basis of geological evidence
and sampling that is considered to be comprehensive, adequate, or limited, respectively.
Market fluctuations in the price of THM as well as increased production costs or reduced metallurgical recovery rates, could change future estimates of resources.
We have reported mineral resources, prepared in accordance with Subpart 1300 requirements of the SEC as part of our exploration and evaluation activities. On July 1, 2022, we filed a
technical report summary for our Titan Project, dated June 30, 2022, which report is an exhibit to this Annual Report on Form 20-F. As of June 30, 2022, we have reported 431 million metric tons of mineral resources at a grade of 2.2% total
heavy minerals (“THM”), containing 9.5 million metric tons of THM at a 0.4% cut-off. Slimes (“SL”) and oversize material accounts for approximately 20% and 2.5% of the THM fraction respectively. Mineralization occurs as a single, large, and
coherent near-surface deposit. In addition, preliminary analysis of valuable heavy minerals (“VHM”) (which form a proportion of the THM) indicates a valuable mineral assemblage consisting of zircon, rutile, ilmenite, rare earth elements
(“REE”), and staurolite.
The estimated breakeven economic cut-off grade of 0.4% THM utilized for resource reporting purposes has been calculated using on a revenue cost break even calculation and is based on the
following assumptions:
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historical 2017 to 2021 annual average prices for ilmenite, rutile, rare earth concentrate and zircon as set out below;
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recovery factors of 82.6% for ilmenite, 60.9% for rutile, 77.1% for rare earth concentrate and 90.8% for zircon;
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operating cost estimates of $3.00/t ROM mining, $3.00/t ROM processing, $0.40/t ROM transport and $0.90/t ROM general and administrative costs; and
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a royalty of 5% is included in the cut-off grade.
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Historic, spot, and forecast product prices (US$/t, 2022 real terms, rounded).
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Product
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Historic
2017 – 2021
(annual average,
US$/t)
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Spot
pricing1
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Forecast
2023 – 2027
(annual average,
US$/t)
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Forecast
2028+
(annual average,
US$/t)
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Rare earth concentrate
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$4,8212
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$11,180 – $12,850
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$14,325
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$17,690
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Rutile
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$1,030
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$1,960 – $2,280
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$1,475
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$1,285
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Chloride Ilmenite
|
$200
|
$390 – $470
|
$305
|
$310
|
|
Zircon (premium)
|
$1,405
|
$2,500 – $3,025
|
$2,240
|
$1,685
|
|
Zircon (concentrate)
|
$630
|
$945 – $1,330
|
$1,010
|
$760
|
Historic, spot, and forecast individual REE prices (US$/t, 2022 real terms, rounded).
|
Rare Earth Oxide
|
Historic
2017 - 2021
(annual average
US$/kg)3
|
Spot
pricing4
(US$/kg)
|
Forecast
2023 - 2027
(annual average
US$/kg)
|
Forecast
2028+
(annual average
US$/kg)
|
|
Lanthanum
|
$1.8
|
$1.2
|
$1.4
|
$1.4
|
|
Cerium
|
$1.7
|
$1.3
|
$1.5
|
$1.5
|
|
Praseodymium
|
$64.1
|
$143.9
|
$194.4
|
$242.4
|
|
Neodymium
|
$58.2
|
$143.9
|
$204.6
|
$255.1
|
|
Samarium
|
$2.0
|
$$3.3
|
$4.9
|
$6.8
|
|
Europium
|
$44.5
|
$27.6
|
$34.5
|
$40.2
|
|
Gadolinium
|
$24.0
|
$79.0
|
$108.1
|
$130.1
|
|
Terbium
|
$695.0
|
$2,109.6
|
$2,419.6
|
$2,935.2
|
|
Dysprosium
|
$253.3
|
$371.2
|
$565.5
|
$690.6
|
|
Holmium
|
$61.7
|
$193.1
|
$295.5
|
$337.1
|
|
Erbium
|
$26.3
|
$53.7
|
$64.8
|
$73.9
|
|
Ytterbium
|
$12.8
|
$14.8
|
$18.6
|
$21.7
|
|
Lutetium
|
$545.8
|
$782.7
|
$900.9
|
$1,051.0
|
|
Yttrium
|
$3.6
|
$12.3
|
$16.1
|
$22.7
|
|
1
|
Sources: Ruidow.com at June 29, 2022 and Iluka Resources.
|
|
2
|
Refer to table below for individual prices for REE’s that contribute to the REE concentrate price and table below for the percentage of each REE in our REE concentrate. REE historic average pricing
is based on limited available data for 2017.
|
|
3
|
REE historic average pricing is based on limited available data for 2017.
|
|
4
|
Source: Argus at June 29, 2022.
|
Pricing has been based upon the following standard product specification requirements:
Initial Assessment product specification requirements.
|
Product
|
Product specification requirements
|
|
Rare earth concentrate
|
Mineral rare earth concentrate with 58.68 weight % total rare earth oxides (TREO) – as set out in Table 19. Value of rare earth concentrate calculated as 31% value of contained TREO plus 10% premium for
Titan Project’s heavy rare earth enrichment.
|
|
Rutile
|
Bulk rutile with titanium dioxide content (TiO2) of 94% - 96%
|
|
Chloride Ilmenite
|
Chloride ilmenite with titanium dioxide content (TiO2) of 58% - 65%
|
|
Zircon (premium)
|
Premium bulk zircon with ZrO2 + HfO2 >66%
|
|
Zircon (concentrate)
|
Zircon concentrate with ZrO2 + HfO2 >30%
|
Key product specifications of Titan-derived rare earth mineral concentrate.
|
Rare Earth Oxide
|
Concentration (weight %)
|
|
La
|
10.50%
|
|
Ce
|
21.90%
|
|
Pr
|
2.59%
|
|
Nd
|
9.85%
|
|
Sm
|
1.80%
|
|
Eu
|
0.15%
|
|
Gd
|
1.48%
|
|
Tb
|
0.20%
|
|
Dy
|
1.19%
|
|
Ho
|
0.22%
|
|
Er
|
0.66%
|
|
Tm
|
0.09%
|
|
Yb
|
0.54%
|
|
Lu
|
0.08%
|
|
Y
|
7.43%
|
|
TREO
|
58.68%
|
Key assumptions and parameters relating to the THM mineral resources are discussed in technical report summary for our Titan Project, dated June 30, 2022, which is being filed as an exhibit
to this annual report.
|
Titan Project – Mineral Resources as of June 30, 2022
|
|
Resource
Category
|
Metric tons
(in
millions)
|
Grade
(THM
%)
|
THM
(million
metric tons)
|
Cut-off
grade
(THM
%)
|
THM assemblage
|
|
Zircon
(% of
THM)
|
Rutile
(% of
THM)
|
Ilmenite
(% of
THM)
|
REE
(% of
THM)
|
Staurolite
(% of
THM)
|
|
Measured
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Indicated
|
241
|
2.2
|
5.3
|
0.4
|
11.3
|
9.3
|
39.7
|
2.1
|
15.6
|
|
Inferred
|
190
|
2.2
|
4.2
|
0.4
|
11.7
|
9.7
|
41.2
|
2.2
|
13.7
|
|
Total
|
431
|
2.2
|
9.5
|
0.4
|
11.5
|
9.5
|
40.3
|
2.1
|
14.8
|
Comparison of mineral resources as of June 30, 2022 and June 30, 2021
We did not have mineral resources estimates as of June 30, 2021. As a result, we are not providing an analysis of changes in estimates for mineral resources. Our mineral resource estimate (MRE) as of June
30, 2022 incorporates results from 107 sonic core drill holes for a total of 4,101 meters drilled by us during 2020 and 2021. We have subsequently completed drilling outside of the MRE area and it is anticipated that these drill hole
results will be incorporated into a future upgraded MRE. For information about the assumptions and criteria used in preparing our mineral resources, our technical report summary, which is an exhibit to this Annual Report on Form 20-F,
including Section 11 (Mineral Resource Estimate), Section 13 (Mining Methods) and Section 16 (Market Studies).
Mineral resource internal controls
We have internal controls for reviewing and documenting the information supporting the mineral resource estimates, describing the methods used, and ensuring the validity of the estimates.
Information that is utilized to compile mineral resources is reviewed by appropriate QPs and is subject to our internal review process, which includes an internal peer-review. The QP reviews and validates the reasonableness of the criteria
used for the purposes of estimating resources and reserves. We recognize the risks inherent in mineral resource and reserve estimates, such as the geological complexity, interpretation and extrapolation of data, changes in operating approach,
macroeconomic conditions and new data, among others. Overestimated resources and reserves resulting from these risks could have a material effect on future profitability.
The Company engaged Primero Group Americas Inc. (“Primero”) to manage the Initial Assessment for the Titan Project near Camden, Tennessee.
The Initial Assessment for our Titan Project is based on a mine life of 25 years and includes a mineral deposit with a nearby Wet Concentrator Plant (“WCP”) located approximately at 28 km
northwest from the city of Camden. The Titan Project also includes a dry Mineral Separation Plant (“MSP”) located approximately 2 km southwest of the city of Camden. The distance separating the two plants is approximately 30 km and accessed
via public roads and highways.
The products from the Titan Project include ilmenite, rutile, premium zircon, zircon concentrate and rare earth concentrate (mainly monazite). Key production values are presented below.
Titan Project – Key Initial Assessment Outcomes
|
Titan Project Average Annual Production
Targets over 25-year mine life :
|
| |
Ilmenite
|
95,500 t/y
|
| |
Rutile
|
16,700 t/y
|
| |
Monazite
|
4,600 t/y
|
| |
Zircon - premium
|
22,400 t/y
|
| |
Zircon - concentrate
|
16,000 t/y
|
Operating and capital costs
The Initial Assessment estimates the Titan Project’s annual average annual operating cost of approximately US$67 million per annum over the 25-year mine life, including royalties. The
intended accuracy of the operating cost estimate for the Titan Project is ±35%.
The Initial Assessment estimates the Titan Project’s initial capital costs to be US$237 million for the construction of the mine, WCP, and MSP, including a 30% contingency. The intended
accuracy of the initial capital cost estimate for the Titan Project is ± 35%.
Land tenure status
At June 30, 2022, the Titan Project comprised of approximately 11,071 acres of surface and associated mineral rights in Tennessee, of which approximately 453 acres are owned outright,
approximately 1,357 acres are subject to exclusive option to purchase agreements, and approximately 10,618 acres are subject to exclusive option to lease agreements. Other than the option agreements described above, there currently are no
material liens or encumbrances on the property comprising the Titan Project. However, in order to develop the project, we will need to obtain permits and approvals as described under “Item 4. Information on the Company—B. Business
Overview—Governmental Regulations—Extraction Permits and Approvals.”
Our option to lease agreements, upon exercise, allow us to lease the surface property and associated mineral rights from the local landowners, and generally have expiry dates
between mid-2026 to late-2027. During the option period, our option to lease agreements provide us with exclusive right to access, enter, occupy and use the surface property for all purposes related to exploring for and evaluating
all minerals in return for making annual option payments and bonus payments during periods when we conduct drilling. Our annual option payments generally range between US$25.00 to US$75.00 per acre and our
drilling bonuses generally average approximately US$1.00 per drill foot. Our obligation to make annual option payments and drilling bonus payments cease if we exercise our option to lease. Upon exercise, in the case of an option to lease,
we will pay an annual minimum royalty, generally US$75 per acre, and a mining royalty, generally 5% of net revenues from products sold.
Our option to purchase agreements, upon exercise, allow us to purchase outright the surface property and associated mineral rights from the local landowners, and generally
have expiry dates between 2022 to 2023. During the option period, our option to purchase agreements provide us with exclusive right to access, enter, occupy and use the surface property for all purposes related to exploring for and
evaluating all minerals in return for making annual option payments and bonus payments during periods when we conduct drilling. Our annual option payments generally range between US$25.00 to US$50.00 per
acre and our drilling bonuses generally average approximately US$1.00 per drill foot. Our obligation to make annual option payments and drilling bonus payments cease if we exercise our option to purchase. Upon exercise, in the case of a
purchase, we will pay cash consideration approximating the fair market value of the property, excluding the value of any minerals, plus a premium.
Exploration and development plans
During the next twelve months, we have plans to undertake further drilling to expand and increase confidence in Titan Project deposit, as well as further metallurgical testwork, hydrology
and geotechnical studies, and economic studies to assess the economic potential of the Titan Project and define a critical minerals reserve base.
On June 30, 2022, we reported the results of the Initial Assessment on the Titan Project, which demonstrate the Titan Project’s potential to be a sustainable, low cost and globally
significant North American producer of titanium, rare earths and other low carbon critical minerals needed for advanced U.S. industries such as space, aerospace, electric vehicles and 3D printing, as well as critical defense applications. We
also believe the results suggest that there is a significant potential to grow production and the Titan Project’s life in the future. The Initial Assessment, which adhered to the guidelines in Subpart 1300 of Regulation S-K, considered
mining, processing, metallurgical, infrastructure, economic, marketing, legal, environment, social and government factors.
Following the completion of this initial assessment, we may undertake additional technical studies, including pre-feasibility and/or feasibility studies. These additional studies will also
adhere to the guidelines in Subpart 1300 of Regulation S-K. If we complete all technical studies (and all necessary permitting activities), we may then undertake minerals extraction and processing activities. However, we currently do not have
detailed plans for any component of the exploration and development plans.
Subject to market conditions and the ability to define an economically viable critical minerals deposit, our separate business plan for the Titan Project is to become a strategic, U.S.
domestic source of high-quality, sustainable, low-cost and low-carbon titanium and other critical mineral feedstocks, including rare earths, to the United States.
We plan to effect our business plan as described in “Item 4. Information on the Company—A. History and Development of the Company—Exploration and Development Plans.”
Figure 1: Titan Project location of properties
Figure 2: Titan Project location of properties containing mineral resources (the coordinate system and datum used for modeling is UTMZ16N, NAD83)
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