PDAC-Canada's Argex focuses on tech, not mining https://www.reuters.com/article/2013/03/03/mining-pdac-argex-idUSL1N0BTM5820130303
Sun Mar 3, 2013 6:59pm EST
* Company developing new process to extract titanium dioxide * Plant feasibility study due in the next few months * Aiming to commission first plant in mid to late 2014 By Allison Martell TORONTO, March 3 (Reuters) - The TSX Venture Exchangerecently hailed Argex Titanium Inc as one of itstop-performing mining issuers, but the Canadian company is in norush to actually build a mine. Instead, Argex is preparing to construct a plant where itcan produce titanium dioxide - used to make white paint, amongother things - from ore produced by other companies, using itsnew extraction process. "Our focus is getting to cash flow as quickly as possible,"said Chief Executive Roy Bonnell in an interview on the eve ofthe Prospectors and Developers Association of Canada convention,where hundreds of junior miners and explorers strut their stufffor investors. "We're kind of evolving towards being a specialty chemicalcompany with what I call a hedge against raw material prices, inthe fact that we could develop our own properties, if it makeseconomic sense." A feasibility study for Argex's first commercial-scale plantwill likely be done in the next few months, Bonnell said. Thecompany's target is to commission the plant, which would mostlikely be built in Quebec, in mid to late 2014. Argex touts its process, now running at a pilot plant justwest of Toronto, as environmentally friendly - it says tailingscould be safely used as construction material - and moreflexible than conventional techniques. "We can use more sources that the other methods cannot use,"said Bonnell. "It allows us to essentially source ore bodiesthat others reject, and (that) therefore are cheaper." To be sure, selling pigment-grade titanium dioxide would putArgex up against big players - DuPont is a majorproducer. But last spring, Argex won some support from anotherheavy hitter, paint producer PPG Industries Inc. The two companies agreed to a "technical collaborationagreement" to make Argex's pigment compatible with PPG's needs.Terms were not disclosed, but shares jumped as much as 15percent, to what was then an all-time high. Analysts that cover Argex are positive, with Thomson ReutersI/B/E/S showing two "strong buy" ratings and one "buy" rating,and an average target price of C$2.38 ($2.32), well aboveFriday's closing price of C$1.28. With a market capitalization of about C$150 million, thestock has more than doubled over the last twelve months. PROJECT FINANCING Financing has become a major challenge for small mining andexploration companies, as the euphoria that lifted the sector inrecent years recedes. Argex had C$6.7 million in cash and short-term investmentsas of Sept 30, according to its last quarterly report. It hasmore than enough cash to get through this stage, Bonnell said,but will need project financing to build a full plant. That could mean traditionally equity and debt financing,Bonnell said, a strategic partnership with a customer, asupplier, or another processing company, or all of the above. CAUTIOUS ON THE TROUGH In 2010, Argex completed a resource estimate on its LaBlanche iron, titanium and vanadium property, on the north shoreof the St. Lawrence River in Quebec. It also owns an iron oreproperty in the Labrador Trough of Eastern Canada. Big swings in the price of iron ore over the last sixmonths, paired with uncertainty over how much Quebec'sgovernment will help develop the area, has jeopardized theviability of projects in the rich iron region. In February, Canadian National Railway Co hit pauseon its plan to build a new rail line through the trough, ageological formation that extends south-southeast through Quebecand Labrador. While Bonnell sees long-term potential in the region, he isnot rushing into anything. "Prices have come back a lot since last year," he said."Prices aren't bad, but I think ... interest is still a littlebit weak at this stage."