ferrets stock to watch: bemax resources ltd

Ferrets Stock to Watch: BEMAX RESOURCES LTD
09:06, Thursday, March 01, 2007

FAST-GROWING MINERAL SANDS PRODUCER SEEMS TO BE OVERLOOKED

Sydney - Thursday - March 1: (RWE Aust Business News)
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OVERVIEW
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Bemax Resources Ltd (ASX:BMX), a mineral sands producer and
explorer, is now getting its act together, reflected by a net profit of
$4.8 million for 2006, up 269 per cent on the $1.3m profit in 2005.

You could not say at this stage the shares have reciprocated for
shareholders, probably because there are so many of them.

Revenue was $80.2 million against $53.8 million previously, and
EBIT was $12.8 million against $2.5m.

The 2006 year was one of significant milestones for Bemax.

The company now operates three mine sites and two mineral
separation plants, following the completion of developments of its new
Murray Basin operations in 2006.

Construction and development was completed on schedule and on
budget.

Heavy mineral concentrate (HMC) production increased 168pc over
2005 levels from 276,353 to 741,857 tonnes.

Bemax's managing director Tony Shirfan said "The improved 2006
financial performance demonstrates that Bemax has completed the
transition from an explorer with development aspirations, to a company
that has a strong operational base (now the fifth largest Titanium
feedstock producer in the world) and clearly identified growth
opportunities.

"The key factor in the transition process (which started in 2004
with the acquisition of Cable Sands mineral sands assets) has been the
development of the new Murray Basin operations on schedule and within
budget.

"The successful execution of the first large-scale project in
the region has proven the company has the capability to develop projects
in this region, even at a time when many in the resources industry have
experienced significant project delays and/or significant project cost
over runs," Mr Shirfan declared.

He said that during 2006 the company had also made considerable
progress in other key areas including:

* Exploration in the Murray Basin (which is focused on locating
and defining Titanium and Zircon rich deposits within close proximity of
the existing infrastructure) achieved a 25pc increase in regional Heavy
Mineral Resources and a 100pc increase in Heavy Mineral Reserves;

* Development planning for the second Murray Basin Mine, the
Snapper Mine, progressed to the stage where the company has completed
detailed pre-feasibility studies and has lodged the environmental
assessment documentation. The next phase in the development program will
be to undertake detailed scoping and design work from which the budget
and timetable will be established. It is anticipated at this stage that
construction and commissioning will occur over 2008/2009;

* Design and engineering requirements and statutory approvals to
expand the mineral separation plant in Broken Hill are also either well
advanced or already in place. Future expansion plans can now be
implemented with minimal lead time and it is anticipated at this stage
that construction and commissioning of a secondary mineral circuit will
also occur over 2008/2009;

* The re-purchase of Zircon marketing rights for the Ginkgo and
Snapper deposits Zircon production. Previously the company had contracted
to sell its zircon production on an agency and commission basis, an
arrangement that dates back to the pre-feasibility stage of the Murray
Basin project. Whilst the re-purchase of the marketing rights requires an
investment of $US9 million over three years, the opportunity to brand and
develop the market for its own expanding and increasingly valuable Zircon
production is worth considerably more to Bemax in the
medium-to-longer-term; and

* Development of an additional revenue stream from the sale of
primary ilmenite from the Murray Basin operations.

This product has relatively low TiO2 ,and elevated chrome levels
resulting in it initially being stockpiled.

However, in late 2006 Bemax sold product into the Chinese market
for the first time and has since received additional orders for this
product and a further refined product which is produced from the primary
ilmenite using existing processing circuits.

"Based on the achievements over the past 12 months, Bemax is now
extremely well placed to expand the production of titanium minerals and
zircon from its Murray Basin operations through the development of the
Snapper Deposit and improve the production efficiency (through the
installation of purpose-built rutile and zircon circuits) at the Broken
Hill mineral separation plant," Mr Shirfan said.

SHARE PRICE MOVEMENTS
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Shares of Bemax Resources yesterday traded steady at 25c. Rolling
high for the year is 42.5c and low 22.5c. All-time high is
44.5c. The company has 941 million shares on issue with a market cap of
$235.2 million.

Last week Bemax's 32.7 per cent major shareholder, the National
Titanium Dioxide Company Ltd (Cristal), reported its acquisition of the
Millennium Inorganic Chemicals subsidiary of Lyondell Chemical Company
in a $US1.2 billion transaction.

Cristal will become the world's second largest titanium dioxide
pigment producer with plants and operations in the United States,
Europe, Saudi Arabia, Brazil and Australia.

In a statement on the transaction, and the effect on the
company's shareholding in Bemax, Cristal chairman and CEO, Dr Talal
Al-Shair, said Cristal would remain a strong and committed shareholder in
Bemax as it continues on its aggressive growth path.

Bemax controls a strategic and world-class resource base which
the Bemax management has shown, convincingly, can be developed
successfully and efficiently.

Meanwhile since release of Bemax's recent quarterly report a
number of investors have sought clarification on the effect on
production of the recent increases to spiral capacity on the wet plant
at the Ginkgo Mine.

In the period, the company reported a 2 per cent improvement to
rutile and zircon recoveries and 5 per cent improvement to leucoxene
recovery.

Rutile and zircon are the key products produced from the Ginkgo
mine.

Production of these products has been excellent since
commencement of mining and accordingly the positive impact on these
products resulting from the modifications, which were designed to target
leucoxene production, are of extra benefit.

BACKGROUND
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Bemax Resources is one of Australia's premier mineral sands
companies and is headquartered in Brisbane.

In 2006, Bemax took up the position of the fifth largest
titanium dioxide feedstock producer in the world when it delivered on
production schedules from the new Murray Basin and existing Western
Australian operations.

Australia is the world's largest supplier to the global titanium
feedstock industry and is also the leading supplier of zircon to the
ceramics, refractory and foundry industries.

Bemax is focused on ensuring that the company builds on and
strengthens its position as a major titanium feedstock producer, while
maintaining flexibility in production to enable the company to meet
changes in the market place and satisfy our client's demands.

The company is well positioned to take advantage of the high
demand for zircon, particularly from China, and the firm market outlook
for titanium feedstock.

The TiO2 industry is an integrated global business that has
grown rapidly since the first production of TiO2 pigment in 1919.

It is one of the world's largest inorganic chemical businesses,
ranking only behind ammonia and phosphoric acid.

The TiO2 pigment industry is a $US9 billion industry.

TiO2 demand has been recently forecast, by some industry
analysts, to grow at an average rate of 2.5pc over the next five years.

The current outlook for pigment demand is better than it has
been for a number of years, due mainly to the very rapid and continuing
industrialisation of China.

With the majority of global pigment producers running at
capacity, expansion of existing production facilities is being
considered by a number of producers.

Added to this are recent announcements of new buildings in China
by existing producers and when coupled with studies for the construction
of a world-scale plant in that country, will result in continuing demand
for feedstock to service the increased demand.

Bemax continues to implement and expand a well focused and
well-funded exploration program to locate and define further titanium and
zircon rich deposits, focussing on the development synergies that will
flow from the existing infrastructure in Western Australia as well as
that established for the Pooncarie project.

The company presently has, in addition to resources in Western
Australia, resources in the Murray Basin capable of sustaining mining
there for over 60 years.

Regarded by the industry as a world-class zircon and titanium
mineral sands province, the future of Bemax and indeed the mineral
sands industry in Australia, is in the Murray Basin.

ENDS

Copyright © 2007 RWE Australian Business News. All rights reserved.