Tuesday, 5 June 2012

Argex Mining shares rise as TiO2 grade sensitivity analysis shows improved project economics

Argex Mining (CVE:RGX) (OTCBB:ARGEF) saw its shares rally Tuesday after reporting results of a titanium dioxide (TiO2) grade sensitivity study, which showed improved project economics.
Argex is a junior Canadian resource company that is developing the advanced stage La Blache titaniferous magnetite project, and also owns the Lac Brûlé high grade ilmenite and the Mouchalagane iron ore projects, which are all located on Quebec’s North Shore.
The aim of the study, conducted with Montreal-based BBA Inc, was to assess the impact of different TiO2 grades of ilmenite feedstock on the operational parameters of the CTL hydrometallurgical process.
The company said higher feedstock grade significantly increases TiO2 output tonnage and significantly reduces opex per tonne of TiO2 production.
"The internal analysis, completed with BBA, demonstrates improved project economics by using higher TiO2 grade feedstock for the CTL process," said Argex president and CEO, Roy Bonnell.
"These promising results, demonstrate not only the important value-added that the acquisition of the Lac Brûlé property represents, but also why we have initiated preliminary testing of selected third-party ilmenite concentrates in order to determine the optimal feedstock specifications to maximize the profitability of the process."
Three different raw material scenarios were considered for the sensitivity analysis with TiO2 grade ranging from 32.0% to 53.9% and Fe/Ti ratio ranging from 2.2 to 1.0.
With a TiO2 grade of 32%, TiO2 output tonnage was 78% higher, with opex costs, per tonne of TiO2 produced, reduced by 46% and capex costs higher by 7%.
At a grade of 47%, TiO2 output tonnage was increased by 248%, with opex reduced by 64% and capex increased by 16%.
At at even higher grade of 53.9%, TiO2 output tonnage was increased by a whopping 309%, with opex reduced by 69% and capex higher by 22%.
The results of the sensitivity analysis were reported in relative percent terms compared to a base case reference scenario, which is based on operational parameters for TiO2 pigment production using a raw material similar in composition to the mineralization outlined at Argex's La Blache property in Quebec. The base case scenario considered raw material grading 18.9% TiO2 with Fe/Ti ratio of 3.9.
The operational parameters considered in the study included raw material input tonnage, TiO2 pigment output tonnage, capex, and plant operational expenditures, otherwise known as opex, per tonne of TiO2 produced.
The study assumed that the feedstock for each of the scenarios was purchased from a third-party supplier, with the purchase and associated transportation costs not factored in.
Credits for iron, vanadium or other by-products were also not taken into consideration for the opex parameters of the sensitivity analysis.
"The internal study shows that an increase in the TiO2 grade of the feedstock significantly lowers the operating cost per unit of TiO2 produced," said COO and VP of technology, Enrico Di Cesare.
"With a similar capital investment, we could increase potential revenues by more than three times and reduce our operating expenses per tonne of TiO2 produced by close to 70%.
"Furthermore, because of the fixed quantities of iron that an industrial module can process due to equipment constraints, results show that lower iron content in feedstock allows the company to process a larger amount of raw material."
The sensitivity analysis was based on the production of TiO2 pigment from a conceptual hydrometallurgical plant based on the CTL process, with capacity corresponding to the size of one industrial module.
Operating cost assumptions were unchanged from the La Blache preliminary economic assessment, the company said.
The high grade Lac Brule property covers part of the Labrieville anorthosite complex, which hosts known magmatic iron oxide deposits strongly mineralized in titanium.
Historical exploration work completed on the property in the 50s and 70s outlined three massive ilmenite lenses, while an internal study done in 2005 reported a mineral resource estimate totalling 3.8 million tonnes and having an average grade of 30.1% TiO2.
Such tonnage is, however, not confirmed by the recent NI 43-101 report.
In early April, Argex announced that it entered into a technical collaboration agreement with PPG Industries (NYSE:PPG) to develop and optimize PPG's technology for TiO2.
The goal is to develop a titanium dioxide product that can meet conventional standards for interior and exterior paint and coatings applications - to be produced by Argex.
Titanium dioxide is an inorganic substance characterized by brightness and very high refractive index, making it an ideal pigment in paints, plastics and paper.
Argex has adopted a  strategy for the scale-up of its proprietary process that allows it to produce high purity TiO2 directly from run-of-mine material from its 100 per cent owned deposit.
The process is running continuously at the mini-plant in Mississauga, Ontario.
Additionally, the company owns 100 per cent of the Mouchalagane property, which is a large Labrador Trough iron ore property that represents further potential upside for the Argex shareholders.
Shares of Argex were lately up almost 5 per cent Tuesday afternoon, at 66 cents just after noon.

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