Scandium International Mining (TSX: SCY) forecasts that its Nyngan scandium deposit in Australia will be in production in the first half of 2019, which should make it the first scandium-only producing mine in the world.
The large, shallow and high-grade scandium project in New South Wales, 500 km northwest of Sydney, has already received approval of its environmental impact statement, and the company has signed the first of what it hopes will be many offtake agreements.
Last month Scandium International kicked off detailed engineering and design work on critical path, long-lead items after receiving a mine lease in May 2017 — the final major approval needed to start mine development and construction of the wholly owned project.
“The Nyngan scandium project is now fully permitted, ready for construction and … seeking customers,” the company’s president and CEO, George Putnam, tells The Northern Miner in an email interview. “We intend to offer scandium both to aluminum alloy manufacturers and to end-use customers of alloys, in the form of AlSc2% master alloy, which is the desired form of product for alloy applications.”
Scandium is a specialty metal that enhances the performance of aluminum alloys by refining its grain structure and making it stronger.
Aluminum-scandium alloys are known for their corrosion resistance, weldability and heat tolerance, and can be used as heat stabilizers in solid oxide fuel cells and in lighting.
Perhaps the brightest future for scandium-enhanced alloys, however, rests in the aerospace, automotive and rail industries, where lightweighting carries a premium.
Earlier this year, the company signed a memorandum of understanding with Weston Aluminium, a privately held aluminum products manufacturer, to jointly make aluminum-scandium (AlSc2%) master alloy on a commercial scale. Weston Aluminium has a production site 400 km from the Nyngan project and 50 km from Newcastle.
While the process for making AlSc2% master alloy is generally known, efficiencies vary widely in practice, Scandium International says. In addition, although many entities make and sell aluminum master alloys globally, very few have the capability or access to scandium. The company’s goal is to offer a master alloy product to aluminum alloy customers directly, as well as continue to offer scandium oxide to customers.
The company has an offtake agreement for 7,500 kilograms a year over three years with Alcereco, a private Canadian company in Kingston, Ontario. Alcereco was founded by former scientists at Alcan who researched and developed advanced alloys.
Scandium International Mining’s Nyngan scandium property in Australia. Credit: Scandium International Mining.
Putnam believes in the rapidly growing market in scandium and the value of the scandium-mineralized laterite clay belt in New South Wales.
“We see the mineralized laterite belt in central New South Wales as a game-changer for meaningful scandium supply to world markets at commercial prices and quantities, and we think the reliable operating jurisdiction in Australia will add confidence to customer decisions to request and adopt scandium in their products.”
Christopher Ecclestone of Hallgarten & Co., a boutique investment firm based in the U.K., has been following the company for many years. In a research commentary he notes that, until recently, scandium was “one of the lesser-talked-about technology metals,” but is now “receiving increased focus and mention.”
He also says the supply situation is “severely limited, with literally only a few tons of product hitting the market per annum — all of that produced as a by-product of the refining and processing of other metals.”
A definitive feasibility study in April estimates that Nyngan could produce 37,690 kilograms of scandium oxide a year over a 20-year mine life at product grades of 98% to 99.8%, which “allows for significant expansion potential, as markets warrant,” Putnam says.
The study forecasts a net present value of US$178 million using a 10% discount rate and a 33% after-tax internal rate of return. Capital costs are estimated at US$87 million with a 3.3-year payback.
The study is based on measured and indicated resources of 16.9 million tonnes averaging 235 parts per million (ppm) scandium. Proven and probable reserves stand at 1.4 million tonnes grading 409 ppm scandium, reflecting the average scandium head grade for the duration of the 20-year, first-phase project.
The study envisions a plant feed of 240 tonnes per day, or 75,000 tonnes a year, based on conventional, open-pit operation, with a strip ratio of 2.1 to 1.
Processing would involve initial high-pressure acid leaching, using a continuous autoclave that is pressure fed with preheated ore and doused with sulphuric acid. Subsequent circuits would recover the liberated scandium using solvent extraction, oxalate precipitation and calcination to generate scandium oxide.
In addition to Nyngan, the company recently acquired the Kiviniemi scandium property in Finland. Kiviniemi was discovered and partly drilled by the Geological Survey of Finland and it in effect replaces the Scandium International’s Tordal scandium project in Norway, which it dropped earlier this year.
Hallgarten’s Ecclestone has increased his target price to 75¢ per share from 60¢.
At press time the company was trading at 25.5¢ a share, near the bottom of a 52-week range of 22¢ (December 2016) to 47.5¢ (March 2017).
The company has 292 million shares outstanding for a $75-million market capitalization.
Management and insiders own 45% of the company.
Scandium International’s management team is comprised of former executives from BHP Billiton (NYSE: BHP), including Putnam, whose career included roles as BHP’s assistant treasurer, and various mineral and petroleum division chief financial officer positions.
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