Explorer Platina says it has a robust business case for developing its Platina Scandium Project (PSP) – but first it needs to secure crucial environmental and mining approvals, offtake agreements, and project financing.
A Definitive Feasibility Study (DFS) for the PSP in central New South Wales found a staged development could generate a net present value (NPV) of $234 million, post-tax IRR of 29 per cent, and a payback period of 5.3 years, based on a 30-year mine life.
Miners undertake up to four different types of studies to determine whether or not a resource can be mined economically.
These are, in order of importance, scoping, preliminary feasibility (PFS), definitive feasibility (DFS) and bankable feasibility (BFS).
IRR and NPV are used to estimate the profitability of a potential investment. Generally, the higher they are the more desirable the potential mining operation.
The Platina (ASX:PGM) share price, which has tumbled from highs of 17.5c in the last 12 months, briefly bounced up 11 per cent on the news to 6c.
Platina would initially build a $68 million, 20-tonne per year processing plant, which it can expand to 40 tonnes per year for an additional $15.6 million “as market demand for lightweight aluminium-scandium grows”.
And there’s an opportunity to make additional cash by generating cobalt, nickel, platinum and high purity alumina products.
A testing program recently demonstrated that a 99.989% pure high-purity alumina (“HPA”) could be produced as a by-product.
The company is now focused on completing the environmental impact assessment, mining licence application, development applications (mine and process plant), securing offtake, and project financing.
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Platina managing director Corey Nolan said scandium’s greatest value lies in the functional properties it imparts when alloyed with aluminium.
“When used in combination with other common aluminium alloys, scandium can produce stronger, heat tolerant, weldable aluminium products,” Mr Nolan said.
“These products are being increasingly incorporated into transportation applications for light-weighting (electric vehicles) and lowering fuel efficiency requirements.
“The company’s strategy is to capitalise on this significant market opportunity and bring the Platina Scandium Project into production as quickly as possible.”
Scandium: in demand
Scandium is added to aluminium products to make them lighter, stronger, more corrosion-resistant and heat-tolerant.
It is also used in solid oxide fuel cells – a clean, low-pollution technology that can generate electricity at high efficiencies.
The aviation industry in particular is interested in scandium-alloyed aluminium materials because it believes they can reduce aircraft weights by 15 to 20 per cent as well as lower the cost.
Platina says current global supply is between 15 tonnes and 20 tonnes per year, with current prices ranging between $US1100 and $US3,000/kg depending on the quality of the material.
“The market for scandium oxide is very fragmented with poor availability of supply driving high volatility in pricing,” the explorer told investors in October.
“The Company’s strategy is to build [PSP] in a number of stages in order to grow and develop a stable market for scandium.”