The White House Executive Order on critical materials heightens scandium interest

The September 30, 2020 White House Executive Order (‘EO’) on critical minerals is just what was needed to give a huge boost to the mining sector. Not sure why ‘scandium’ and the ‘rare earth group’ was listed separately in the EO, since scandium is considered a rare earth, but the end result is that this has escalated market interest in this critical material.

One of the 35 critical minerals is ‘scandium’, used mostly for the purpose of lightweighting, scandium-modified aluminum alloys have equivalent yield and tensile strength to steel and titanium alloy but are 1/3 the weight of steel and 40% lighter than titanium.

Declaring this “a national emergency“, the EO states that the US intends to support companies that have “projects that support domestic supply chains” and “the establishment of secure critical minerals supply chains”, which could reasonably be expected to include Canadian projects such as Imperial Mining Group Ltd. (TSXV: IPG).

Peter Cashin, President, CEO and Director of Imperial Mining Group, which own their flagship scandium-rare earth Crater Lake Property in northeastern Quebec, commented to InvestorIntel when asked on their thoughts on the EO with the following:

“President Trump’s Executive Order should force an orderly build-up of the necessary steps required to secure a domestic supply chain for rare earth materials. In addition to the European Unions expressed push to lessen Chinese import dependence, our hope is that the order will apply to development of the significant critical mineral resources that exist in Canada.”

What is driving this market demand? Available scandium oxide supply today is estimated at just 25 to 35 metric tonnes per year, insufficient for widespread adoption of scandium-aluminum (“Sc-Al”) alloys for automotive, aerospace and defense sectors where they can be used for high-strength applications and in sectors in which lightweighting is essential. In addition to Sc-Al alloys, scandium is used in the Solid Oxide Fuel Cell (“SOFC”) industry because of its heat stabilization and electrical conductivity characteristics. In essence, the competitive advantage of scandium is as a hardener in aluminum alloys, which is what renders them corrosion-and thermal-resistant.

If your not familiar with the Imperial Mining Group Ltd. (TSXV: IPG), Imperial’s Crater Lake Property has a large diameter complex which is host to high-grade scandium and niobium deposits. Scandium oxide grades to date have been very good ranging from 0.0235% to 0.0319% (235-319g/t). Other drill results have included 528g/t scandium oxide over 8.8 meters, showing the high grade potential of the Crater Lake Project.

The company expects the Crater Lake Project to be a small open-pit operation with an on-site magnetic concentrator and/or sensor-based sorting. It is anticipated that the project will be low CapEx, OpEx due to the higher grades and expected simple process recovery methods.

Imperial Mining is currently working to expand the resource and have recently discovered several new areas of scandium mineralization. These new showings lie within the same 14-km arcuate magnetic trend hosting the three previously defined mineralized zones (Boulder, TGZ and STG) on the property. Assay results are expected very soon.

Crater Lake’s 14-km arcuate magnetic trend hosting the three previously defined mineralized zones (Boulder, TGZ and STG)

Source

Peter Cashin states: “The new discoveries are extremely positive news for Imperial in view of the rapidly growing demand and limited supply for this important new technology metal……Currently, scandium is only produced as a minor by-product in China and Russia and, with supplies limited, it is our belief that Crater Lake represents an important alternative, primary scandium supply source to serve western consuming markets.”

A new US Executive Order to boost critical mineral mining, strong management, a high grade growing scandium-rare earths asset in a good mining jurisdiction, and a growing need for scandium and rare earths elements all combine to support Imperial Mining Group. Due to the early stage the current market cap is only C$9m.




Demand for scandium set to rise and Imperial Mining offers an early stage high grade project

Scandium is the key to lightweight electric vehicle boom

With the electric vehicle boom set to take off this decade, expect a surge in demand for the ‘lightweighting’ of key materials. An essential part of reducing the weight of electric vehicles (EVs) is scandium, which mixed with aluminum creates lighter and stronger alloys for EVs. Lighter weight means extending battery range in EVs and improving fuel efficiency and reducing greenhouse gases in combustion engines.

The current scandium market size is estimated to be about 35 tonnes per year, however Bloomberg forecasts this could grow to reach 1,800 tonnes pa by 2035 – a 51 times increase in demand. However, if the sales of electric vehicles surge as some forecast and reach 30 million by 2030, the demand for scandium would jump to a staggering 5,250 tonnes pa – a 150-fold increase on today’s demand based on  just a 0.2% scandium oxide-aluminum alloy in each EV.

This exponential increase in demand for scandium does not include its additional consumption by key industries such as solid oxide fuel cells, aerospace & defense, aviation, electronics, sporting goods, and ceramics.

Building 30 million new electric cars a year by 2030 will require an additional 5,250 tonnes of scandium oxide every year to achieve 100%  lightweighting

Source: Imperial Mining Group investor presentation

Imperial Mining Group Ltd. (TSXV: IPG) owns a diverse portfolio of high-grade assets including gold, base metals and scandium-rare earth projects. The company’s focus is on development of its high-quality scandium-rare earth Crater Lake property in northeastern Quebec, Canada. The property has a large 6km diameter complex that is host to high-grade scandium and niobium deposits.

The Crater Lake scandium rare earth project

The 100% owned Crater Lake Project is located 200km northeast of Schefferville, Québec, 95 km from the end of the Trans-Labrador Highway. The property consists of 57 contiguous claims covering 27.8km2.

Crater Lake location map

Source: Imperial Mining Group investor presentation

Imperial Mining Group is currently working to expand the resource. Previous drilling has defined a mineralised zone over 250 meters in strike and 170 meters in depth. Scandium oxide grades ranged from 0.0235% to 0.0319% (235-319g/t), which is pretty good. Scandium is not rare, however finding commercially viable grades (>200-300g/t) of scandium is very rare. More recent drill results have included 528g/t scandium oxide over 8.8 meters, showing the high grade potential of the Crater Lake Project.

The company expects the Crater Lake Project to be a small open-pit operation with an on-site magnetic concentrator and/or sensor-based sorting. This should reject 50-60% of mined material, resulting in high scandium recoveries and lessening transportation risks and costs. It is anticipated that the project will be low CapEx, OpEx due to the higher grades and expected simple process recovery methods.

Future catalysts will include planned further metallurgical work, a PEA expected by Q1 2021, permitting, and an anticipated FS by Q3 2023, subject to financing.

Multiple market opportunities ahead as the demand for scandium increases dramatically

Source

Closing remarks

I have no doubt that the EV boom will take off, which means lightweighting will become essential for electric cars to boost performance, especially range. In the meantime there are plenty of other areas that demand scandium, so I expect the scandium sector to perform well this decade.

Imperial Mining Group has an exciting early stage high grade scandium-niobium project in northeastern Quebec. Also of interest is their 100%-owned Opawica Gold Project in the Abitibi region of northwestern Québec where recent drilling discovered 1.21 g/t gold (Au) over a 13.3 meter length.

Risks are always high with junior mining stocks at the early stages and in this case the scandium market is another risk as it is yet to be fully developed. Of course with high risk comes the chance for high reward. Imperial Mining Group trades on a current market cap of just C$9 million. One to follow closely, especially since securing a source of North American scandium could soon be very much in demand.




Is there a meteoric market rise for scandium next?

It is extremely rare to find a metal where the potential demand is much greater than what anyone can supply. It has happened the past year with the emissions metals palladium and rhodium which were up 75% and 366%; so it makes good sense that scandium may be next.

Scandium-Aluminum alloy is a key material in the lightweighting industry

Lightweighting of vehicles is a massive new trend this decade as we switch over to electric vehicles. Just 2% scandium added to aluminum increases strength, heat tolerance, corrosion resistance, and weldability. A lighter vehicle will require less energy (less gasoline or less lithium-ion batteries) to move a set distance.

Scandium offers improvements in aluminum particularly suited to the transport sector; marine, automotive, and aerospace.

Scandium’s place in lightweighting is on the rise which means the need for new scandium mines has never been greater. Whilst still a niche industry with a high scandium metal price, if a miner was able to produce significant volumes then prices would go down, which in turn would mean order volumes would go up.

A 2019 scandium report stated:

“The major factors driving the growth of market studied are the accelerating usage in solid oxide fuel cells (SOFCs), and growing demand for aluminum-scandium alloys. On the flipside, lack of awareness, high cost, and inconsistent supply are hampering the growth of the studied market.”

According to the aircraft designers, about 0.1% to 0.5% trace amount of scandium added to aluminum can help to increase not only the strength of aluminum but also helps to reduce the weight of aircrafts by 15% – 20%.

Scandium demand will surge as scandium prices fall as new scandium supply comes online

Scandium is used in some fuel cells

A little known fact is that scandium is used in certain fuel cells as the electrolyte. For example, Bloom Energy sells a solid oxide fuel cell (SOFC) that produces electricity directly from oxidizing a fuel. Scandium oxide (Scandia) with zirconia (ScSZ) is the electrolyte. Scandium in SOFCs enables a lower operating temperature resulting in longer-lived equipment and less costly materials of construction. Bloom Energy in the US is the leading SOFC manufacturer and one of the largest scandium users.

Scandium’s greatest potential is in light-weighting such as with aluminum alloys

The space and aviation industry is very aware of scandium and its lightweighting effects. Given the massive fuel savings lightweighting has enormous potential.

With the current movement to vehicle electrification, lightweighting becomes so much more important for mass market vehicles. A lighter electric car will mean more power and range for the same size battery.

Airbus has already been involved in designing new lightweight scandium-magnesium-aluminum alloys. One example is the lightweight bike shown below.

A super light weight bike made from Sc-Mg-Al alloy by Airbus subsidiary APWorks

Source

The problem to date has been that global scandium supply is only around 10 tonnes, which means scandium is expensive. Once larger scandium supply is made available then prices can fall. Miners with good grade scandium projects can still be profitable.

The potential market for Al-Sc alloys is enormous once costs come down

Scandium International Mining Corp.

Scandium International Mining Corp. (TSX: SCY) 100% owns the Nyngan Scandium Project, located in New South Wales, Australia. Scandium International’s New South Wales lateritic clay belt, represents a recent game-changing discovery of scandium grades approximately four times the grade of existing sources. The resources are surface mineable enabling the company to deliver scandium at a large enough economical scale to promote much wider use and development of the metal.

Scandium International is at the stage where they can now offer an aluminum-scandium alloy (Al-Sc2%) master product using scandium from their Nyngan Scandium Project. This is highly significant as potential customers can now sample a final Al-Sc product. As the Company stated in their recent news release:

“The aluminum industry largely relies on independent master alloy manufacturers to make and supply alloying products, including small amounts of Al-Sc 2%.”

Sampling a product is an essential stage that most miners go through before having their product accepted and subsequently sign off-take agreements.

Also of utmost importance is increasing scandium production volumes so as economies of scale kick in to lower scandium prices to more affordable levels. Scandium International stated:

“The Nyngan mine scandium output will change the scale of Al-Sc2% master alloy manufactured, globally, and the Company can utilize that scale advantage to effectively minimize the manufacture cost of scandium feedstock to the aluminum alloy customer.”

The next step for Scandium International is to assess and then build a large-scale demonstration plant for conversion of scandium oxide to Al-Sc2% master alloy.

Scandium International stated:

“The size of the demonstration plant is being investigated, but will be flexible in operation and output, and will allow for much more direct customer/supplier relationships with potential scandium product customers globally.”

Scandium International’s goal is to build the world’s first primary scandium mine as soon as possible (~2021) from their 100% owned Nyngan Scandium Project. All key approvals are in place, including a mining lease, making the Project ‘shovel ready’. The May 2016 Definitive Feasibility Study resulted in a Phase 1 project NPV8% of US$225 million, and a IRR of 33%, and only US$87 million CapEx, based on a cost estimate for the Project of US$557/kg scandium oxide, selling price of US$2,000/kg scandium oxide, and 37,690 kilograms (37.69 tonnes) of scandium oxide production per year. The Project has potential to expand as scandium product demand grows. Exploration at the site has defined a measured and indicated resource 7x larger than what was used in the currently planned 20 year mine life outlined in the DFS.




The super metal that the aerospace and electric vehicle industries dream of….

Scandium is an element, discovered in Scandinavia in 1879. The world’s production of scandium is very small – approximately 10-15 tonnes per year, in the form of scandium oxide; mostly coming from China, Russia, Ukraine and Kazakhstan. Scandium is used in alloys to increase strength, lighten weight, and help resist corrosion. By adding a small percentage of scandium it allows aluminum sheets to be welded to each other, which is then used in the aerospace and automobile industries. The lightweight, strength and corrosion resistance of aluminum-scandium alloy has huge potential future demand from the aerospace and electric vehicle industries, just to name a few.

Scandium International Mining Corp. (TSX: SCY) is a development stage company, focusing on the exploration, evaluation, and development of specialty metals with a focus on scandium assets in Australia. Their principal property is the 100% owned Nyngan Scandium Project, located in New South Wales, Australia.

Nyngan Scandium Project

For Scandium International the lateritic clay belt, in New South Wales, represents a recent game changing discovery of scandium at grades approximately four times the grade of existing sources. The average process plant feed grade over project life is 409 ppm of scandium. These resources are surface mineable and can deliver scandium at large enough scale to promote much wider use of the metal. The Nyngan Scandium Project is situated 500 km north-west of Sydney, with excellent local infrastructure having nearby water, rail, power and workforce. Mineral exploration at the site has defined a measured and indicated resource significantly larger than the currently planned 20 year mine life.

Scandium International progress timeline

The 2016 Feasibility Study highlights include: A capital cost project estimate of US$87 m, operating costs of US$557 per kg of scandium oxide, with an estimated 37,690 kg of oxide to be produced per year over the 20 year mine life. This will generate an after tax cumulative cash flow over the project life of US$629 million, with a post-tax NPV 10% of US$177 million.

2016 Feasibility Study highlights

On August 16, 2018 the Company signed a Letter of Intent with PAB Coventry Ltd. to test scandium containing alloys in aluminum sheet forming applications. PAB is recognized as an industry leader in innovation, design, and product development, using Hot Form Quench (HFQ®) technology.

Car parts using HFQ® forming technology

George Putnam, CEO of Scandium International Mining Corp., commented: “We are pleased to add PAB to our list of partners exploring scandium’s advantages in aluminium parts manufacturing using HFQ® technology. PAB is an established, recognized aluminium alloy solutions-provider to UK automotive and UK/European aerospace customers. PAB also represents a pathfinder in the commercial application of HFQ® forming technology, developing what is required to meet the tougher demands of large scale production applications. HFQ® shows excellent promise for high volume commercial application in aluminium formed parts and products, and we believe scandium additions could offer additional benefits, when combined with this process.”

Scandium has long been recognized as a valuable commodity, but economic concentration of scandium is rare. Having so many uses there are so many marketing opportunities for scandium as it promotes superior performance by widening the aluminium alloy choice. Scandium International proudly state: “We are serious about building a mine and a fresh new specialty metal market. We anticipate Nyngan to be the first to market, with the only primary scandium project.”

Scandium International Mining Corp. has an advanced stage, high grade, large sacle, scandium project in a safe jurisdiction. The Company could see itself in an enviable position with supplies of 37,690 kg of scandium oxide per year supplying emerging markets like electric vehicles, and the aerospace and aviation industries; as soon as 2020 or shortly thereafter.

Scandium International Mining Corp. is headquartered in the US state of Nevada, and has a market cap of C$ 58 m.




The Age of Scandium

Historically, scandium applications have flown under the majority of investors’ radars since economical deposits are extremely rare. As a result, small quantities of the metal are traded between private entities for undisclosed sums, and as such, the world has no accurate idea of how much is traded and at what price. At the beginning of any market, however, there comes a point when enough material changes hands that people begin to take note; analysts begin to accurately track stockpiles, supply and demand, and the resource may even appear on terminals and futures markets. Right now, the only thing missing to initiate this new age for scandium is decent supply, as unique applications are already widely known.

Scandium International Mining Corp. (TSX: SCY)(“Scandium International”) are inching ever closer to a primary supply out of New South Wales, Australia, and things are looking good; the company recently acquired 100% interest in its flagship resource (previously it held 80%) in order to accelerate its development. The project has now received all key approvals, including a mining lease, necessary to proceed with project construction, which comes in at $87.1million, according to the Definitive Feasibility Study (DFS) completed in 2016.

Scandium has been used in the past to create uniquely strong aluminium alloys that were thought to be utilised by the Russian military in the construction of lightweight parts for their MiG fighters. Russia still sells these historic stockpiles to industry, but it is thought that the coffers are rapidly emptying. Demand for scandium is still an estimated quantity, but it is believed that global consumption is now around 15 tonnes per year. Looking back, annual scandium consumption was always thought to be around 2 – 10 tonnes, so not only have we seen an increase of late, but furthermore, if only a miniscule fraction (0.1%) of the global aluminium market were to involve scandium in production, we would see demand surge to around 350 tonnes annually. The only missing ingredient here is stable supply of useful quantities.

I firmly believe that, since Scandium International are on-track to bring online the world’s first primary scandium deposit, this company could itself be the black swan that initiates the paradigm shift that takes scandium out of ambiguity and into the hearts and minds of traders and analysts. The company’s deposit, known as Nyngan, could produce 37,690 kg of scandium oxide each year according to its Definitive Feasibility Study (DFS), with operating costs of US$557/kg scandium oxide. The DFS also assumes that the price of the finished oxide material is US$2000/kg, but in reality, this is the very bottom end of the scandium oxide selling price, with 1kg going for as much as three times that today.

It is well known that scandium is difficult to find due to it being a dispersoid; it can’t stand to be around itself. The fact that the Nyngan deposit features grades as high as four times what we’d normally see means that the company has a real chance of pioneering mass consumption of a metal, whilst enjoying the protection from competition afforded by its obstinate loneliness. Scandium is a big deal of an opportunity, and since it cannot currently be traded on futures markets, an interested investor would do well to pay close attention to the company closest to initiating meaningful supply.




Scandium International – DFS sets the CAPEX Bar Low

In 2014 when we first brought Scandium to the attention of investors, one of “first movers” was Scandium International Mining (TSX: SCY) then called EMC Metals that was advancing its project which has now reached the Definitive Feasibility stage while gaining a potential offtaker. The very affordable capex number has set the bar low and Scandium wannabes will find it very hard to come in with numbers lower than those for the Nyngan project.

Its operational focus is on scandium project holdings, specifically the Nyngan Scandium project (and the neighbouring Honeybugle property) in Australia. The NSW laterite clay belt offers a unique production advantage. The Nyngan deposit is large and the grades are rather stunning. Nyngan might be described as the “Bayan Obo of Scandium”. The company also holds the Tørdal Scandium project in Norway. It is on the Nyngan Project that the Latest DFS has been published.

The Rationale

Scandium is one of the lesser talked of technology metals but one that is getting increasing focus and mention. This is despite the fact that the supply situation is dire with literally only a few tons of product hitting the market per annum and even that is as a by-product of the refining and processing of other metals. The applications for the element are known, particularly in aluminium alloys, solid oxide fuel cells and lighting but it’s just that manufacturers will not tool up for the metal if they cannot be guaranteed greater (reliable) supply.

Nyngan

The Nyngan scandium resource is located approximately 500 kilometers northwest of Sydney, Australia. It has in its time been trawled over by such substantial (now disappeared) players as Selection Trust, North Broken Hill and Anaconda. The property consists of three exploration licenses encompassing over 9,000 hectares, and is accessible via a 25 km sealed road from the local town of Nyngan.

NSW-Map

Resource & Reserves

The original resource was established on the Nyngan property in 2010.

The revised NI 43-101 Measured and Indicated scandium resource now totals 16.9 million tonnes at an average grade of 235ppm scandium, from all scandium-bearing sources including hematite, limonite, saprolite and some bedrock resource material. The updated resource retains the same economic cut-off value of 100ppm as was used in the earlier resource estimate.

Nyngan-Scandium-Resource

Another result of the DFS was the publication of the first Reserve on a portion of the resource, associated specifically with that portion of the limonite resource. The DFS utilizes 1.4334 million tonnes of limonite resource over 20 years, almost all in the Measured Resource category, and that portion of the overall resource has generated the Reserve figure.

Nyngan-Mineral-Reserve

PEA/PFS

In October 2014, the company published its Technical Report on the Feasibility on Nyngan prepared by the engineering firm of Larpro Pty Ltd, of Brisbane. The main mining assumptions were that a portion of limonite-only resource, in one particular area of the overall resource, would provide a 20-year mining pit sufficient to supply the processing facility at a rate of 75,000 tpa, at an average grade of 371ppm Scandium. The results of that PEA are shown in a comparative table below. It is important to note that the estimates utilized an AUD/USD foreign exchange rate of US$0.90 even though the rate subsequently dived to nearly US0.70.

The PEA premised a conventional flow sheet, employing high pressure acid leach (HPAL) and solvent extraction (SX) techniques, which were modeled and validated from METSIM modeling and bench scale/pilot scale metallurgical test work.

Nyngan-Project-Metrics

The Definitive Feasibility Study

Nyngan-DFS-CapexIn April of 2016, the company published its long awaited DFS. This document was important not only in that it updated the previous PEA but in that it is the only DFS on a primary Scandium property that we know of and thus gave the market an in-depth view of how such a project might evolve and its implications in costings and potential addition of supply to Scandium Oxide to the global marketplace.

The well-known Australian consulting firm, Lycopodium Limited, (ASX:LYL) led the feasibility study.

The DFS outlines that the likely capex is US$87.14mn, most of which is related to processing costs and infrastructure, as detailed at the right.

Mining & Processing

The Nyngan deposit is surface-mineable, with an overall strip ratio approximating 3.4:1. The mine plan is limited to a 20-year duration, with the plan utilising less than 12% of the total measured and indicated resource contained in the resource model.  There will be two pits with the depths being 50 m and 45 m for the western and eastern pit respectively.

The mine plan targets delivery of only limonite resource to the processing facility, the processing route designed in this Feasibility Study is tailored for limonite-only production, at a 75,000 tpa ore feed rate.

At a daily process plant feed rate of 240 tpd, the strategy is to campaign mine and stockpile the mined material several times during the year, rather than attempt to maintain and operate an even smaller mining fleet throughout the year. It is envisaged that 25,000 to 30,000 tonnes of scandium-bearing material will be mined during each campaign. The mining strategy will minimise stockpile quantities by only mining the required ore quantities during each mining campaign. On this basis, the required ROM capacity is relatively small, at 50,000 t maximum.

The High Pressure Acid Leach (HPAL) test work, solvent extraction and precipitation programs conducted in 2015 have resulted in an evolution of the flowsheet compared to that developed by other researchers in the following areas:

  • The extraction phase could be conducted successfully on HPAL discharge liquor
  • Stripping was easily conducted with a low acid strip solution
  • High purity scandium oxalate could be precipitated from the solvent extraction loaded strip liquor
  • Calcined scandium oxide, approaching 99.9% purity can be produced using the process flowsheet that has been developed with 83.7% scandium recovery of scandium in feed to final product

nyngan_site

The scandium oxalate precipitate is filtered in a plate and frame filter press. The scandium oxalate is added to rotating kiln furnace and calcined to scandium oxide at 900°C, before being washed with deionised water and filtered. The scandium oxide is then dried and dispatched in small security drums.

Nyngan_process

Once at nameplate capacity, the processing plant is forecast to produce between 36,600 and 42,000 kilograms of scandium oxide product per year, averaging 37,690 kilograms/year over the 20 year feasibility study production period. Oxide product will be produced on-site at grades between 98% and 99.9%, as Sc2O3, and will be offered at grades that meet various customer requirements, suitably packaged for direct sales to end users.

So in summary the main features of the current study are:

  • A Reserve totaling 1.43 million tonnes, grading 409ppm Sc was established on the limonite part of the resource
  • Recently published Definitive Feasibility Study estimates CapEx at a low US$87mn
  • DFS projects NPV (at 10%) of US$177 million and IRR is 33.1%, (NPV at 8% is US$225 million)
  • Cash costs of US$557 per kg of Scandium Oxide, with DFS utilizing US$2,000 per kg pricing while current price is somewhere around US$5,000 per kg
  • Oxide product volume averages 37,690 kg per year, over 20 years, giving revenues of over US$75mn per annum and operating revenues (EBITDA) of around US$50mn per annum
  • Strong potential for expansion of demand based upon increased availability at current or lower prices – applications follow supply

Pricing

There is a certain element of licking your finger and sticking it in the air to see which way the breeze is blowing in Scandium pricing. It seems be conducted mainly by nods and winks. The USGS has some number available but their accuracy remains undecided. At least they give us a guide.

Scandium-Oxide-Price-per-kg-99-99

It is key to note the SCY is using a price of $2,000, so a good 60% below supposed current market prices. Scandium International will not only be a first mover it will be a game changer in the Scandium space.

Conclusion

Now the DFS has come off the presses, the investment community can see that the capex is on the right side of achievable helped by the infrastructure and jurisdictional advantages of being located in central New South Wales.

While the project’s rated production is higher than the perceived global consumption, that global consumption number is suspect and more likely to be upwardly revised than to be an over-estimation. The dynamic of “build it and they will come” also seems to have promise here with Scandium having a potential for expanded demand if only end-users could be sure they can get all they need if they tool up for greater production of lamps, bicycles, auto parts, wheels, aircraft, high speed trains—-whatever wants a lightweight high performing metal alloy, ideally already being made from aluminum.

Certainly Nyngan moving into operation might also drive down prices making the metal more accessible to potential users with the potential to create a virtuous cycle of affordability and enhanced supply driving widened applications. Beyond all this it creates a market for a specialty metal, in a safe Western jurisdiction, over which the Chinese do not have a stranglehold.

In the absence of other comps in this metal another way to look at the Nyngan scandium project is as an equivalent to a one ounce/tonne gold project.  One tonne of 400 ppm (g/t) elemental Sc = US$1,200 revenue, assuming a US$2,000/kg sales price for oxide, equates to an ounce of gold at US$1,200/oz.

The challenge now will be financing, with the most likely scenario being an offtaker stepping up to ensure that they get first dibs on the product flow from the mine upon completion.