You're right, it seems like a Goldilocks number, not too, big not too small.
The pricing is subject to a confidentiality agreement because of the small market and opaque pricing for scandium. Long term its price will go down but the first mines will be relatively high cost compared to what is developed in the future and selling into a market where SCY`s supply could either theoretically tank the price, or rise with increased scandium demand that it intrinsically creates. Because of this the numbers are confidential because SCY wants to hedge some of their production, remove some of its start up risk, and still maintain some upside depending on scandium prices. Alcereco has the opposite perspective, they want scandium but also see the potential for the price to fall if it is produced in size and dumped on to the market, and so this deal is likely a fair compromise between the two positions.
I would bet about 50% is locked at say $1200/kilo (double estimated production costs) with another component based on an average market $1500-3000/kilo price, which will become more transparent, and likely cheaper over the years as sc is finally put into market.
I would also like to point out that this deal is worth probably $30 million dollars or so, for a company worth $25 million.
Overall - very good news and more confirmation of SCY's steady progress. My confidence in this stock increases with every one of these PRs.
Putnam:
"This strategic alliance allows SCY to partner with an established alloy technology group to design, develop and demonstrate fit-for-purpose scandium-content aluminum alloys for existing aluminum market applications. The scandia offtake agreement directly supports the efforts of ALCERECO to pursue these individual markets, and demonstrates the keen interest in scandium-content products that exists in the aluminum alloy markets today."
Gary Economo, President of ALCERECO commented: "Our longstanding efforts to develop markets that leverage our in-house expertise in scandium/aluminum have been delayed in the past by the lack of secure sources of scandium. This agreement allows ALCERECO in concert with Scandium International to move forward with joint ventures in several areas now that the supply risks have been reduced."
ABOUT ALCERECO INC. ALCERECO is an advanced materials development company that provides services and specialty processing capabilities to companies innovating in a diverse range of markets, including aerospace, automotive, electronics and consumer/sporting goods. ALCERECO staff work with a range of materials and processes and have the tools and knowledge to take on leading-edge projects such as development of aluminum-scandium alloys, specialty ceramics, composites and graphene enhanced materials. The company has a particular focus on lightweight materials capable of delivering greater strength, functionality and exceptional performance. The company operates out of the Grafoid Global Technology Centre in Kingston, Ontario that was originally founded by Alcan Aluminum in the 1940s. ALCERECO is a Canadian private company, and a wholly-owned subsidiary of Ottawa-based Grafoid Inc., a global leader in diverse graphene application development. For more information about ALCERECO, please visit www.alcereco.com
