Renzy Mines Renzy/Agra seek financing for vanadium plant

Everything is beginning to fall into place for Renzy Mines of Toronto, Ont.

Back in 1972, this little coats- listed company, devised a way to extract vanadium — a grey, ductile metal used to give added strength and toughness to steel — from the waste fly ash of Suncor’s big oil sands treatment plant in Fort McMurray, Alta.

Now President Robert Geisler has to raise just $1.5 million to retain a 50% interest in a $9-million project that could see that technology come to fruition as early as late fall 1988. He’ll probably do that this week by way of a private placement.

“We’re not sure exactly how much we’ll raise,” Mr Geisler told The Northern Miner, “but it will likely be $2-4 million.”

What really got the ball rolling for Renzy was a deal, in mid-1985, with the Toronto-listed diversified giant, Agra Industries of Saskatoon, Sask.

That company spent more than $1 million in pilot plant work over the past year and a half, convincing itself that the technology is commercially viable. Agra has now agreed to put up its share of the equity required to finance a commercial-scale project that could potentially crank out 2.3 million lb of vanadium pentoxide per year.

At current prices ranging from $4.38(C) per lb for metallurgical grade vanadium to $6.46 per lb for the chemical grade variety, the joint venture could generate revenues of $8.7-12.9 million a year, depending on the quality of the product produced.

Some 30 million lb of carbon will also be produced by the plant, which at 25 cents -30 cents per lb could provide substantially more revenues for the partners.

“Once we get this under our belt,” Mr Geisler says, “we’ll take a look at the nickel, scandium and rare earths.”

Although the companies will not reveal their projected cost of production, Agra’s vice president of corporate development, Al Rankin, describes the expected rate of return as “adequate.”

With government incentives totalling $8 million, the equity required from Agra and Renzy will not be great.

Government assistance could come from two sources:

* a $2-million grant from the federal government by way of the recently-formed Western Diversification Initiative being administered by William McKnight, Minister of Indian Affairs and Northern Development.

* and a $6-million loan from the Alberta Opportunity Co., an Alberta crown corporation.

Agra and Renzy must first satisfy certain legal requirements before this government assistance can be granted.

“There are also some technical risks involved,” Mr Rankin tells The Northern Miner in a telephone interview from Saskatoon. “We’ll be scaling the plant up by a factor of about 10, but we’re confident it will still work at that scale.”

The Cambrian Engineering Group, of Mississauga, Ont., one of several consultants in the engineering group of companies controlled by Agra, were instrumental in convincing Agra management the project is viable.

“We are not going into this thing lightly,” Mr Rankin says, “while it’s a risk, the incentives provided by the governments make it an excellent investment opportunity for us.”

With annual sales of $150-200 million a year already, Agra has built a reputation of being willing to take measured risks on various business investments. Besides its engineering group of companies, Agra also has interests in the food and community service sectors of the economy.

If all elements of the financing package fall into place, procurement of equipment will take place next spring and construction of the plant should be completed by late summer of 1988. Test runs and plant start-up procedures would likely take most of the fall and commercial production would likely begin in the early winter of 1988.

Renzy has 2.6 million shares outstanding, trading this week in the $1.10-$1.20 range.