Scandium International soars 41.67% last week on positive news from its Nyngan Scandium Project
Called the “seeds of technology” by the Japanese and the “technology metals” by the US Department of Energy, rare earth elements make it possible for the high tech world we live in today. With rare earth supply concerns centered around China’s 70% supply chain dominance and the US-China trade war, did you know scandium is considered one of the 17 rare earth elements?
Scandium is one of the rare earth elements
Long recognized as a valuable commodity, economic concentrations of scandium are actually rare. Scandium is sourced from low-grade stockpiles or as a by-product from other processing operations. The current supply is limited and has resulted in high market prices and hence limited adoption. Scandium is used typically with aluminum as alloys for the aerospace industry, and for lightweight sports equipment such as bicycle frames, fishing rods, golf iron shafts, and baseball bats.
Scandium International Mining Corp. (TSX: SCY) has just advised (July 24, 2019) that its Australian subsidiary, EMC Metals Australia Pty Ltd. (EMC), has been granted a new mine lease pertaining to the Nyngan Scandium Project in New South Wales, Australia. The 100% owned lease will cover 364 hectares of freehold land. The company will be able to construct a mine of similar scale to current plans within the footprint of the new lease. As a result of this great news and interest in the rare earths sector, Scandium International’s stock price soared 41.67% last week.
Background to the mine lease being granted
A formal objection was filed in 2016 by an affected landowner opposing the application of the mine lease. In April 2019, the Company elected to file a new mine lease agreement covering only EMC owned surface rights related to the project that excluded approximately 504 hectares of surface rights owned by the objecting landowner. The validity of the landowner’s ‘Agricultural Land’ objection remains under investigation. Depending on the results of that investigation, it remains possible for EMC to receive several mine lease grants covering a surface area of approx 870 hectares.
George Putnam, CEO of Scandium International Mining Corp. commented: “This replacement mine lease grant for our Nyngan Scandium Project represents a successful resolution to a complicated matter that has been a distraction for both the Company, and for SCY shareholders, since the start of 2019.”
The Nyngan Scandium Project location map (NSW, Australia)
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Scandium International has remained focused on the work to bring Nyngan Project into production and will make progress with existing LOI partners and continue to court new LOI partners. The Company continues to work on off-take agreements and funding for the Nyngan Project so as to commission the world’s first primary scandium mine.
2016 Feasibility Study on the Nyngan Scandium Project
A 2016 a feasibility study at the Nyngan Scandium Project concluded that the Project has the potential to produce an average of 37,690 kilograms of scandium oxide per year, at grades of 98.0%-99.9%, generating an after-tax cumulative cash flow over a 20 year Project life of US$629 million, with an after-tax NPV10% of US$177 million (after-tax NPV8% is US$225 million). The average process plant feed grade over the 20-year project life is 409 ppm of scandium. The capital cost estimate for the project is US$87.1 million.
Despite its current cost and tiny production volumes, there are multiple potential high-value commercial uses for scandium, especially when used to strengthen aluminium alloys. Just a small amount when alloyed with aluminium produces a stronger lighter, heat and corrosion-resistant, weldable aluminium alloy. The aerospace and aviation industries already use scandium, and the lightweight alloy has the potential to support the emerging electric vehicle industry where weight is also critical. This means the world will benefit from new scandium miners such as Scandium International increasing supply and reducing costs.
Scandium International has a market cap of C$ 53 million.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in ... <Read more about Matthew Bohlsen>