Montreal-based Argex Titanium (RGX-V) is having a great year. The company’s shares have surged 142% over the past 10 months as the company has moved its proprietary solvent-extraction system towards commercial viability.
Argex also maintains a potential raw materials stream in the form of its wholly owned La Blache titanium dioxide (TiO2) project, 120 km northwest of Baie-Comeau, Que.
A year ago Argex released a preliminary economic assessment (PEA) for La Blache that returned encouraging 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 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 ranges in industrial uses from paint to automotive manufacturing — rising through 2015.
Argex’s chief financial officer and co-founder Mark Billings says that TiO2 could hit the US$6,000-per-tonne level by the time La Blache enters production.
Argex scored a big victory in April when it completed a collaboration agreement with American corporation PPG Industries (PPG-N) — a leading global supplier of paints, specialty materials and industrial coatings.
Under 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 align its treatment process with end-use PPG downstream applications, the agreement also provides for negotiating 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,” chief technology officer and vice-president of research and development Charles Kahle II stated in April. “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.”
Since starting up 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 privately held 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 balance of solvents and temperatures, and is notable for a closed-loop design that restricts adverse environmental impacts, and creates relatively inert tailings from La Blache-type ore.
Argex completed a production ramp-up at its pilot plant in early September. The company increased daily plant capacity from 0.3 kilogram to 10 kilograms.
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 3 tonnes of TiO2 per year. The interim development also allowed the company to iron out potential design difficulties when it moves to build a full-scale industrial plant.
In early October Argex contracted out a feasibility study for a commercial-scale titanium dioxide production plant. The company’s first production module will focus on sulphate-grade ilmenite feedstock, which returned improved economics during a grade-sensitivity analysis completed in June.
Argex views 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 end-users, which the company hopes will lead to more partnerships as it approaches production.
In July Argex closed a US$5-million non-brokered private placement with a U.S.-based investment fund that saw the company issue 5.4 million shares at 93¢.
Argex has 116 million shares outstanding and a $121 million press-time market capitalization.
Argex has leapt 65¢ over the past 10 months, en route to a $1.05 close on Oct. 19.