Imperial Mining Group
IPG is developing its Crater Lake property in Quebec, where the Company owns 97 mining claims covering 4,705 hectres. The property benefits from several characteristics that make it very attractive:
- Large surface scandium resource inventory Near Quebec’s aluminum metal production/value-added products
- Near Quebec’s aluminum metal production/value-added products
- Good road, rail, air and hydroelectric capacity
- Supported by the Plan Nord infrastructure program
PEA - Shows Tremendous Value
To date, IPG has explored approximately 10-15% of its property. This has produced a preliminary economic assessment (PEA). The results of this study report concluded:
- Projected gross metal revenue of the minerals produced from the operation total $15.2 billion over the life of the operation
- Gross earnings after-tax are projected at $6.25 billion
- The Project has a pre-tax net present value (NPV) of $2.97 billion and an after-tax NPV of $1.72 billion (10% discount rate)
- Annual net revenues average are estimated at $608.0 million from the sale of high-purity scandium oxide (Sc2O3), scandium aluminum Master alloy (ScAl) and rare earth element (REE) carbonate concentrate
- The pre-tax capital payback is 2.5 years from the start of production.
From the above it is very clear that at a market capitalization of around $10 million, (when the Company executes its strategy), there is a very significant upside.
Valuation
To date, IPG has been flying below the radar. The Company is now embarking on a communications program to raise awareness and bring its valuation more in line with that of its peers. The prospects for the industry, limited competitive pressure and a drilling program that has already resulted in a PEA of around $1.7 billion, it is clear that the current valuation provides a very compelling entry point.
Thesis
When assessing companies for their attractiveness, we have a number of high-level criteria we look at first:
- Market opportunity: what are demand projections, how realistic are these and what risk factors can impact the demand picture.
- Competitive dynamics: does the company have a moat, how fragmented is the industry, what are supply/demand dynamics (e.g. is there lack of competition that will ensure full take-off).
- Management team: capabilities and track record
- Valuation: how is the Company valued compared to its peers and what upside does a company have compared to its peers
IPG ticks all the boxes.
Due to its scarceness, scandium is a high value product
- Pure Scandium metal: ~$14,000/kg
- Scandium oxide: ~$2,000-$2,500/kg
Applying current pricing to projected demand (2040) shows the global opportunity to be around $4.5 billion. With few players in the space, combined with a strong drive to make North America less dependent on suppliers from less friendly jurisdictions, it is clear that IPG is exceptionally well positioned to serve a very size-able and critical need.
Competition
As discussed, there is an urgent need for more scandium production. With the market being supply restricted, competitive forces are limited. The unfragmented nature of the industry further increases the attractiveness of the sector.
https://imperialmgp.com/investors/fact-sheet/