Resource World Magazine

46 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 4 MINING Warren Buffett famously observed that the world's best firms have large "competitive moats". Even if you gave their competi- tors a billion dollars, the upstarts couldn't make a dent against the entrenched giants. But would-be junior metal producer Argex Titanium Inc. [RGX-TSX] is betting it can step up to compete with global Fortune 500 players. It won't take the company a billion dollars either. Argex is right now forging ahead in the titanium business with an initial $10 mil - lion. These monies come after a September 2013 fundraising with government funding agency Investissement Quebec, as well as a US investment fund manager. The com- pany believes it doesn't need a great deal of money to become a significant player in the titanium space. In fact, Argex believes that being low-cost will be a major competitive advantage. That's because of proprietary titanium-processing technology owned by the company: the use of solvent extraction to recover titanium dioxide from ilmenite ore. This is a process that stands in stark contrast to current smelting methods for recovering titanium. Argex is betting that this CTL process technology, as it is called, will beat existing technology in two ways. The first advantage is capital costs. The company is forecasting that the purchase and installation of a 50,000 tonnes per-year CTL processing facility will run less than $250 million. This is a fraction of the cost for tradi - tional sulphate or chloride-based processing technologies. The new CTL technology is also expected to yield a major savings when it comes to operating cost – by reducing outlays for raw titanium ore. Unlike conventional technol - ogy, CTL is capable of handling low-grade titanium ore. The process is also unique in being effective for ore containing other metals such as chromium, vanadium and magnesium – substances that usually scuttle more conventional process circuits. The result is that Argex's titanium-producing facilities will be able to draw feed from an unusual source: plentiful titanium-bearing mine tailings in Quebec, and further afield in mining districts globally. Such feedstock is a no-go for traditional processing circuits. Established producers are forced to look to purer titanium ores to sup - ply their operations. This leads to substantial costs, with ilmenite ore feed running $350 per tonne of titanium dioxide – and rutile ore costing up to $1,800 per tonne. Argex expects its costs for securing ilmenite mine tailings to be substantially lower than that. The company is forecasting all-in raw materi - als costs of around $200 per tonne of titanium dioxide. That's over 40% less than rates for purer ilmenite. Driven by these cost advan- tages, the company sees a great business in making low-cost titanium from its planned 50,000 tonne per-year production facility in Valleyfield, southwest of Montreal. A feasibility study released in October shows such a plant would generate $4.9 bil - lion in revenues from titanium products over 25 years of operation. Operating costs are projected to run just $1.85 billion, yielding a net present value of over $950 million before tax. The internal rate of return is pegged at over 40%. With the positive study under its belt, Argex is now moving to build the Valleyfield plant. In November the company ordered long-lead time equipment. If and when this initial development proves the tech - nology, the next step is big growth. One of the pluses of the company's unique process methodology is how scalable it is – with the ability to expand quickly to as much as 100,000 tonnes per year. That output would place the company amongst the ranks of the world's largest titanium producers. This is a significant achievement, given that major producers in this space include some of the biggest names in industry – including mega- conglomerates like Du Pont, which makes about 20% of the world's titanium dioxide. Argex is thus taking a run at some pretty big players globally. If the company's testing activities bear fruit, Argex could quickly go from a scientific curiosity to a world-stage player in the specialty metals business. That looks to be a pretty good space to be storm - ing these days. Titanium prices have been rising the last few years – hitting US $4,500 per tonne (or just over $2 per pound) in 2012, up from less than US $2,500 per tonne in 2010. Market analysts expect that growing demand for titanium-intensive items like paint and plastics in emerging nations should keep prices buoyant through at least 2015. Argex's timing in bringing its new tech - nology primetime may thus turn out to be perfect in grabbing a share of this lucrative market. n Testing Argex's CTL titanium-processing technology. Photo courtesy Argex Titanium A Junior steps into Fortune 500 territory with titanium By David Forest

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