VANCOUVER — Montreal-based Argex Titanium (RGX-V) is having a great year. The company has surged 142% over the past ten months as it moves its proprietary solvent-extraction system towards commercial viability. Argex also maintains a potential raw materials stream in its wholly-owned La Blache titanium dioxide (TiO2) project 120 km northwest of Baie-Comeau, Quebec.
A year ago Argex released a preliminary economic assessment (PEA) for La Blache that returned solid numbers on a US$800-million development with a 25-year mine life. The company has continued to build confidence by hitting numerous milestones during 2012.
A surging market for titanium dioxide has definitely helped Argex’s cause. The company’s PEA used a three-year trailing average TiO2 price of US$2,846 per tonne, where current TiO2 prices sit at roughly US$4,500 per tonne in Europe. Speculation has the commodity — which has a wide range of industrial uses including everything from paint to automotive manufacturing — continuing to rise through 2015. Argex’s chief financial officer and co-founder Mark Billings is on record as stating that TiO2 could hit the US$6,000 per tonne level by the time La Blache is in production.
Argex scored a big victory on April 3 when the company announced the completion of a collaboration agreement with mega-American corporation PPG Industries (PPG-N) — a leading global supplier of paints, specialty materials, and industrial coatings.
Under terms of the agreement Argex will participate in the development and optimization of PPG's titanium dioxide pigment technology for use in paints and coatings. Assuming Argex can successfully align its treatment process with end-use PPG downstream applications, the agreement also provides for the negotiation of a purchase and supply agreement.
“[We] plan to combine efforts with the goal of developing a titanium dioxide product that can meet conventional standards for interior and exterior paint applications,” stated Charles F. Kahle II, PPG chief technology officer and vice president, research and development, coatings, following the announcement. “This strategic initiative offers the opportunity to leverage our expertise and secure an enhanced supply of this critical raw material. Volatile pricing for titanium dioxide continues to be an important issue.”
Following the start-up of a pilot plant in early 2011, Argex has been fine tuning its proprietary high-purity, solvent-extraction system. The company controls 50.1% of the process through Canadian Titanium Ltd. (CTL), and on June 13 announced a developmental breakthrough resulting in a 3% jump in recoveries, which drives TiO2 purities beyond 99.8%.
The CTL process focuses on a proper balance of solvents and temperatures and is notable due to a closed-loop design that restricts adverse environmental impacts and creates relatively inert tailings from La Blache type ore.
Argex successfully completed a production ramp-up at its pilot plant in early September. The company increased plant capacity from 0.3 kilogram per day to 10 kilograms per day.
The two-stage scale-up was designed to demonstrate higher production rates at lower operating costs, thereby allowing end-user sampling on a larger scale for use in paint applications. Argex is now capable of producing in excess of three tonnes of TiO2 per year. The interim development also allowed the company to iron out potential design difficulties when it moves to construct a full-scale industrial plant.
On Oct. 11 Argex contracted out a feasibility study for a commercial-scale titanium dioxide production plant. The company's first production module will focus on sulfate grade ilmenite feedstock, which returned improved economics during a grade sensitivity analysis completed in early June. Argex continues to view raw titanium dioxide deposits like La Blache as "low risk expansion options," but the company will focus on commercially available feedstock during initial production to take advantage of higher grades.
Argex has outstanding non-disclosure agreements with other major end-users, which the company hopes will lead to further partnerships as it approaches production. In early July Argex closed a US$5 million non-brokered private placement with a U.S.-based investment fund manager that saw the company issue 5.4 million shares at 93¢. The company has 116 million shares outstanding and a $121 million press-time market capitalization.
Argex has leapt 65¢ over the past ten months en route to a $1.05 close on Oct. 19.
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