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Platina Resources’ quality scandium a win for namesake project in NSW

Products derived from Platina’s scandium can produce master alloy material.
Platina’s scandium oxide sample
BigPicture
Platina’s scandium oxide can be used for a 2% scandium-aluminium master alloy
  • Now known as the Platina Scandium Project, the Owendale-area scandium-cobalt-nickel project in NSW was valued at $US$166 million in December 2018
  • The scandium oxide project has attracted the interest of potential long-term partners
  • Demonstration testing has shown scandium oxide from the Platina project can reliably produce a 2% scandium-aluminium master alloy
  • If built, a high-grade scandium mine would pay back initial investment within 5.3 years and bring jobs to country New South Wales

What does Platina Resources do?

Platina Resources Limited (ASX:PGM) (FRA:P4R) (OTCMKTS:PTNUF) specialises in scandium project exploration and development in Australia. It is run by former analyst Corey Nolan, a finance professional and minerals economist who has more than 19 years of experience working in and consulting to the resources industry.

The former Morgan Stanley analyst and Price Waterhouse Coopers corporate advisory services director was the chief executive officer of Sayona Mining Limited, and MD and director at Elementos Limited and Leyshon Resources Limited before joining Platina in August last year.

What is Platina Resources’ flagship project?

Platina’s key asset is the project now known as the Platina Scandium Project, in New South Wales. Previously known as the Owendale Scandium-Cobalt-Nickel Project, the scandium oxide project is about 350 kilometres west of Sydney.

Western Australian company Platina produced a definitive feasibility study for Platina Scandium Project in December 2018, demonstrating robust financials.

The DFS modelled a 30-year mine that would generate an after-tax net present value in real terms of US$166 million ($233 million) at an 8% discount rate to deliver an after-tax internal rate of return (IRR) of 29%.

Platina’s payback period for its high-grade scandium mine was 5.3 years, with its DFS financial model factoring in a scandium oxide price of about US$1550 per kilogram over the life of the project.

This price had been based on the company’s market research and discussions with end-users and is the price the company believes is necessary to drive wider-scale adoption of scandium in alloys.

A US Geological Survey report for 2017 that looked at 5-gram scandium sample sizes valued 99.99% purity scandium oxide at US$4.60 per gram or $4,600 a kilogram.

Scandium International had put scandium oxide prices between $3,000 and more than $5,000, depending on product quality and purity.

Platina’s DFS was based on a December 2018 ore reserve of 4,027 dry kilotonnes at 570ppm scandium, 0.09% cobalt and 0.12% nickel for 3,512 tonnes of scandium oxide (scandia), 3,599 tonnes of cobalt and 4,821 tonnes of nickel.

The reserve was based on a 450ppm scandium cut-off and scandium oxide product being calculated from scandium metal content and a 1.53 factor so as to convert it to the oxide form.

Scandium is generally traded between buyers and sellers and not in a metals exchange environment, with estimates of 10-15 million tonnes a year of supply and demand expected to grow with additional supply sources.

Demand for scandium products comes from buyers interested in sourcing alloy-quality scandium oxide or 99.9%-graded scandium oxide for electrical applications; scandium chloride; scandium iodide in products such as halide light bulbs; scandium fluoride; and scandium acetate.

Following release of the Platina DFS and updated ore reserve, the company unveiled a memorandum of understanding (MoU) with UK processing technology company Metalysis Limited in December 2018 to assess the viability of producing a scandium-rich master alloy.

Later that month the Australian company was able to demonstrate it could reliably produce 2% scandium-aluminium master alloy from Platina project scandium oxide, further improving Platina project economics.

The alloy was produced from scandium oxide or intermediate products in the flow sheet developed in the DFS test work program.

Platina said at the time it was pursuing intellectual property options for the processes it had developed and could scale up the process if potential offtake partners asked for larger samples.

The company had planned to negotiate a technology licensing agreement with Metalysis once its initial test work programs were completed successfully.

What is happening with Platina Resources’ palladium project?

Another project in the company’s portfolio is the Skaergaard gold and platinum group metals (PGM) project in Greenland.

Platina received a number of conditional cash offers for the east Greenland project in light of palladium price increases before opting in December 2018 to appoint a qualified technical advisor to prepare a scoping study for the Skaergaard project as the company determined future options for the asset.

In July 2013 Platina reported a JORC-compliant mineral resource estimate for the PGM project based on price assumptions of US$1,400 an ounce for gold and platinum and US$560 an ounce for palladium.

The price of palladium then went on to increase from US$736 an ounce to US$1,250 in the following five years.

Platina had spent more than $16 million on Skaergaard by December 2018, investing its exploration funds in outputs such as drilling, metallurgy and technical studies.

What is Platina Resources’ reporting schedule?

The company published its December 2018 half-year report to shareholders on March 12, 2019, and is expected to publish its next quarterly reports later this month.

Platina wrote a $285,739 profit in the December 2018 half-year, an improvement of $179,640, or 169%, on the December 2017 half year.

Platina expected to spend $1.4 million in the March quarter of 2019 and earmarked $1 million for exploration and evaluation.

The company had $2.6 million cash at the end of 2018 before bagging a $1.1 million R&D fund cash refund in January 2019.

Inflection points

  • Significant milestones and transactions related to Platina project, including offtake and production take agreements

  • Scandium projects sentiment and demand

  • Final investment decision and financing milestones for Platina project

  • Successful Skaergaard project milestones, including positive scoping study production

  • Palladium and PGM market sentiments

  • Skaergaard project retention-or-divestment decision

  • Significant financing and commercial transactions for the company

Platina board focused on next steps for namesake scandium project

“The DFS assumes that 33% of the available ore reserves are mined over 30 years, and additional ore reserves and mineral resources could provide for decades of additional production or further production expansion,” Platina Resources managing director Corey Nolan wrote on behalf of the company board in the company’s March 12, 2019, December half-year report and accounts.

“The company is now focused on completing the environmental impact assessment, mining licence application, development applications (mine and process plant), securing offtake and project financing.

“The company also invested in developing procedures to produce scandium-containing master alloy including signing a memorandum of understanding with Metalysis Limited in the UK as an important step in being able to provide potential aluminium industry offtake partners with their preferred product.

“Being able to produce the master alloy from an intermediate product may also provide the potential for capital and operating cost reductions in the final flowsheet design.”



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