Survival Guide for the Mother of All Bear Markets from Veteran Bottomfisher John Kaiser
"TMR: What juniors are having the most success moving scandium projects forward?
JK: The two most important ones are Scandium International Mining Corp. (SCY:TSX), which owns the Nyngan deposit in New South Wales, and Clean TeQ Holdings Ltd. (CLQ:ASX), which is acquiring the Syerston deposit from Ivanhoe Mines Ltd. (IVN:TSX). The Syerston deposit is bigger than the Nyngan deposit and has a slightly higher grade. That project was originally a nickel-cobalt project, but Robert Friedland, a substantial stakeholder with a keen understanding of China’s self-imposed environmental mandate, recognized the value of scandium enrichment at the periphery of the subeconomic nickel-cobalt deposit. Ivanhoe is selling Syerston to CleanTeQ because CleanTeQ’s management has experience with flowsheet processes related to scandium recovery. Incidentally, China has become the world’s biggest aluminum producer with 47% of 2014 global supply.
Scandium International is more advanced. It has been working on the scandium potential of Nyngan since 2010. It published a PEA in October 2014 for a 36 ton per annum operation with a capital cost of $78M. That’s about four times what is currently supplied to the market. The company hopes to have the feasibility study done and the mining permit in hand by Q1/16. Then it has to raise the capex. I think it will be able to do it because the proposed mine is in essence a pilot plant study designed to be profitable if the company can attract buyers for its output at the $2,000/kg base case price of the PEA.
If the mine is operational in 2017 and demonstrates that it can deliver the scandium at a profitable price, the aircraft industry and the automotive industry will get serious with long-term planning for deployment of aluminum-scandium alloy components. For these two companies, scandium is a potentially extraordinary growth story where you go from a market that’s almost nothing to a market that could end up being worth $2 billion ($2B) annually.
That is, of course, what has happened to niobium, which was in a similar situation as scandium until the Araxá deposit was discovered in Brazil and developed during the 1960s. That has grown to a $2.5B market today. It makes steel stronger and raises the melting temperature for use in all sorts of applications. Niobium is what you might call an energy efficiency driver for the steel industry because niobium-strengthened steel gets the job done with less weight."