Canadian Metals secures ‘serious’ silica offtake agreement
The Langis project has been on my radar for a good while; strong institutional support, a solid economic model and a sharp technological edge to boot. 100% owned by Canadian Metals Inc. (CSE: CME) (“Canadian Metals”), the project is slated to contain almost 10 million tonnes of high quality silica resources that could be extracted over 26 years, and with construction on the innovative processing plant pegged for 2019, it’s time to see who’s serious about silicon.
The Canadian Metals factory will be built in the Baie-Comeau industrial port area, away from any residential areas and with full access to cheap Quebec hydroelectricity. This location not only benefits from the proximity of industrial partners and efficient infrastructures for maritime, rail and road transportation, but the plant itself will be capable of producing three distinct products from the company’s own Langis feedstock; high grade silicon granules of 10 to 100mm in diameter suitable for the solar power industry, silica fume, a co-product used as an additive in concrete, and slag, a co-product used for manganese alloys.
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Langis has already received considerable institutional investment from the Quebec government, but confidence in the project continues to roll in, as recently the company signed a letter of intent with a major cement manufacturer for a minimum of 35% offtake of its silica fume by-product. The letter of intent will serve as a guideline for the negotiation of a final distribution and operation agreement between the parties, but a large quantity of silica fume from the initial phase (5,000tpa) has effectively been reserved long before actual production and for at least 10 years afterwards.
This almost-guaranteed cash flow means that the company can focus on developing its primary target markets of high purity silica and silicon alloys in North America. Silicon based materials can be formulated to provide a broad range of products from more durable, faster building materials with smarter electronic devices, solar panels and more efficient wind turbines. Canadian Metals is looking to be a global supplier for a number of industries and applications such as glass, ceramics, lighting, oil and gas, paint, plastic and rubber, as well as becoming an integrated supplier to metallurgical industries including foundries, and participating in a wide range of civil, industrial, environmental and related applications. Every single one of these markets is an integral part of the daily lives of millions of people.
But perhaps most valuable to the long-term investor is the escalating demand for the highest grade silicon that can be used in the construction of photovoltaic cells. Silicon is the material-of-choice in solar cell manufacture because it is the first semiconductor we learned to commercialize en-masse, and so we are pretty darn good at it. In fact, over a billion silicon transistors are manufactured per person every year on planet Earth, and infrastructure such as this doesn’t go away overnight. Furthermore, the market for photovoltaic cells is exploding right now, with developing and developed nations alike flocking to renewables and energy storage solutions.
Confidence from investors and customers is one thing, but the safety afforded by the company’s hybrid-flex plant is the icing on the cake; insisting on the construction of a plant that can vary its outputs dependent on market demand makes for a robust model indeed. There are only a few years remaining before Canadian Metals launches the Langis sandstone deposit and the Baie-Comeau plant; the opportunity to get involved early will be lost to the sands of time very shortly.
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