October 20, 2014
Re: Scandium (Sc), the ‘Go To Metals Story’. EMC 'Ahead of the Pack' with First Mover Advantage.
Since my July 18 “Alert #4”, EMC management has been de-risking its Nyngan scandium project at lightning speed. The October 14, 2014 Preliminary Economic Assessment (PEA) is a validation of the project’s value.
I have been steadily accumulating shares in the Company at 10 cents and below and I am continuing to do so and bought another 55,000 at ten cents this morning.
It is my hope that you have been doing the same because, as it stands, the share price could easily double overnight.
John Kaiser and I agree, when the stock starts trading around 30 cents then everybody will want it. All stock that wanted to come out has probably come out by now and the stock could quickly double in price overnight.
As aforesaid, management has been moving at lightning speed. They completed the PEA in 8 weeks’ time and are now steaming towards completing a definitive Feasibility Study.
The PEA was even better than we expected:
- Capital cost estimate for the project is $77.4-million (U.S.);
- Operating cost estimate for the project is $636 (U.S.) per kilogram scandium oxide;
- Oxide product volume is 35,975 kg per year;
- Project constant-dollar net present value discounted at 10 per cent is $175-million (U.S.) (NPV (8 per cent) is $217-million (U.S.));
- Project constant-dollar internal rate of return is 40.6 per cent;
- Oxide product grades of 97 per cent to 99 per cent are estimated;
- Scandium recovery estimate is 84.3 per cent.
This is what John Kaiser wrote about the PEA last week:
“EMC surprised us this morning with a PEA that for the first time shows the world what a robust scandium mine could look like. The numbers on a scaled basis are better than what I modeled last April when I used Metallica's Lucknow study as a benchmark. For those of you used to PEA's with really big NPV numbers, don't let that $175 million NPV for Nyngan discourage you. In this comment I show how the PEA can be scaled up to demonstrate an NPV twice as big.
It is quite clever what management has done, coming up with what is in effect a demonstration plant that can be ramped up with one year's notice and modest additional CapEx.
Although classified as a PEA, there is a lot more behind these numbers than the usual PEA. Mgmt had a choice of going dark and delivering feasibility study by the end of 2015, by which point most of us would have slunk off with boredom. The PEA allows Mgmt to talk not just to investors, but also to end-users, and they are far more important than investors. The stock will take care of itself over the next 8 months, even though that may not seem so obvious at the moment.
The real game is the aluminum end-user audience. They are the ones who need to be promoted so that they dust off their dreams and get it that these new discoveries in New South Wales are a game changer for their Holy Grail, a primary, scalable near infinite supply of scandium at a stable price.
I promised KRO members that EMC was my life raft story for a scenario where the resource bear market worsens. This life raft has now been equipped with an outboard motor.”
In conclusion: Nyngan is the most advanced of a new class of scandium enriched laterite deposits that explorers have found in New South Wales during the past decade. Additional such deposits will be found, which opens the possibility that global demand can grow without indiustry running out of scandium supply. The uniqueness of the Nyngan project lies in “the first mover” advantage and EMC is probably 2 years ahead of the pack as a scandium supplier.
For many retail investors this is a confusing time they are not sure where to turn and they are ‘gun shy’ to invest however, during this tumultuous and fast changing investment environment, EMC is a now opportunity, not to be missed.
John Kaiser: “The heavy lifting has been done. Scandium is a game changer and there are no previous Scandium deposits of this type in the world”.
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Happy investing from Mining Interactive Corp. in Vancouver, Canada.
Nick L. Nicolaas
Direct: +1 (604) 657-4058