spherichrome apps, page-2

Chromite is broken down into two separate groups.
1. Metallurgical
2. Foundry + Chemical.

Metallurgical is lumpy and is seen as nugget size mineral (bit like iron ore), it's blasted and contains impurities, it is upgraded to ferrochrome via a furnace and used in the stainless steel industry. Annual world consumption is 22 million tonnes.

Foundry and Chemical are the 'fines' of the blasted material, contain less impurities because it goes through two extra processes (it's crushed and then sieved to increase quality). Obviously used in the foundry industry, but also used within the chemical industry. Annual world use is 1.5 million tonnes.

Spherichrome is a new level above 'fines' that has never been produced before. It's chromite that has been washed down the Klamath mountains over thousands of years and has been rounded by the river wave action. It is ideal for the foundry industry because the rounded sand packs much tighter than fines. Now Spherichrome could also be used in the chemical industry, but also as feed for ferrochrome, this wouldn't be ideal, for the fact it's of such high quality and demands a premium.

An interesting point is that 14% of all Zircon sand is used for the foundry industry. Zircon is used as a foundry sand because it's finer than 'chromite fines'. Spherichrome is the same GFS and has nearly the same melting point as Zircon.

If management can iron out the issues that are hindering the plant and they can establish with the foundries that it is an equivalent to Zircon, look out on two different fronts.

1. It's of better quality than 'chromite fines' and moulds would tend to break less and you would use less binder (which is damn expensive).

2. Zircon is at $2,450 and going up, not down.

Also remember, they are producing Zircon from the same plant and they indicated to us via the last quarterly, it's completely forward sold for 2012. That shows me, there is nothing wrong with the sand from an impurity or mining level. What would be interesting to know is what is the Zircon being used for? Is it being bought by the foundry industry? The reason I say this, is that Zircon and Chromite have many similar chemical and weight attributes when dry mill separating. Now think about this, we have a plant that isn't up to scrach yet, but they have been selling Zircon for six months. Now you can't have a black sand grain sitting with Zircon which is mainly used as white pigment in paint and plastics. But if you sold it as a foundry sand, there would be no issue. If that is the case (which is just a guess), the theory of Spherichome working with Zircon or as a standalone product gets stronger.

You could say that management have been working around the clock to get the zircon circuit right because of the price being so high, but it's an interesting thought.

Did I answer your question dejavoo? or was I rambling.....again.

Pep