Hi Eintracht,
I do not see any change in the direction of ALK regarding the DP and the points made in the last quarterly indicate this.
- Work continues attempting to gain funding and offtakes,
" Financing
Australian Strategic Materials (ASM) continues to work towards securing finance for the Dubbo Project.
ASM’s key focus is on securing offtake contracts for its products and a resultant strategic investor in the project. The pressure on both prices and supply, as discussed in Product Marketing below is being increased by the tariff decisions of both the United States and China. "
- They are still attempting to value add to the planned output of the DP project
"
Product Development Zirconium
Further samples of zirconium products produced at the demonstration pilot plant at ANSTO were provided to companies during the quarter for testing and evaluation. Feedback on samples tested so far has been positive and confirms the suitability of Dubbo Project zirconium products for a wide range of applications. Additional testing on
yttria stabilised zirconia milling media (microspheres) produced at laboratory scale confirms that high quality material has been produced. Options to produce further samples for product and market development are being considered.
Meetings and discussions continued with technology companies on the conversion of zirconium dioxide to zirconium metal continued during the quarter. Production of hafnium free zirconia and zirconium metal are two of the value added zirconium products under development for the Dubbo Project which can achieve price premiums over standard zirconium products.
Hafnium
Efforts around hafnium oxide conversion to hafnium metal continued in parallel with those of zirconium metal."
- Work continues on the engineering
"Engineering
ASM continues to work with engineers to detail the staged execution model for the Project so that packages can be rapidly let on securing funding. This will be largely completed this calendar year."
- ALK is still attending various conferences to drum up interest
"Product Marketing
Alkane and Minchem (ASM’s Zr marketing agent) attended the
Zircon Industry Association (ZIA) meeting in early September in Bangkok. A record attendance of 115 this year, compared to just 35 last year, highlighting the importance of zircon as a critical raw material for the zirconium industry. Alkane delivered a presentation on ‘Zirconium chemicals supply chain risks and opportunities’, which highlighted global dependence on zircon and Chinese supply, and opportunities for the Dubbo Project.
Minchem also attended Cersai Bologna and met with all of the leading ceramic companies consuming zirconium products for producing inorganic ceramic pigments. Alkane will attend the
Metal Events Rare Earths conference in Hong Kong, as well as
TZMI Congress on zirconium materials in Singapore in November, where it is also presenting.
ALK has indicated for a while now that the markets for the DP products make the gaining of finance a lot more difficult than more traditional metals such as copper etc. Back in 2017 IC stated in an IvestorIntel interview the following and I believe it is still valid and true.
Tracy …
can you tell us what we as shareholders should anticipate maybe in the upcoming quarters that you can talk about?
Ian … look we have an enormous amount of going behind the scenes, a lot of this stuff is very commercially sensitive, we can’t say too much about it but we have multiple deals, multiple off take agreements, multiple technology working agreements with different companies.
And over the next six months to eight months, the remainder of this year we see many of these deals crystallizing and impacting on the project, impacting on its revenue stream and therefore impacting on its ability to get finance.
So it is very important, so I wish I could sit here today and say agreement X will be out next week but it just seems to take inordinately long time to get some of these things finalised and out in the public.
And then you run into the good old issue of companies not wanting their name published for all sorts of commercial reasons and we have to work around that issue of how to tell the world we have this fantastic deal with company X.
It does not sound great company X but there are a lot of those things happening behind the scenes.
In the Mining Journal interview (2017-02-22_Alkane set for defining year) Ian outlines some of the issues regarding finance.
“It is worth understanding, though, that the supply of these commodities has traditionally revolved around short-term agreements. Offtake agreements typically run for six or 12 months, maybe 2-3 years if you are lucky. So that’s one of the complexities we’re dealing with.
“We’re working to educate the banks and financiers and credit agencies that that’s how this works. Sometimes you may not get binding agreements until you’re at a point where you’re starting to produce material that can be certified by the customers. So that demands the right risk management procedure. The banks don’t like that level of uncertainty, but it’s just the nature of the business and we have to live with that.”
In the meantime ALK is attempting to keep Tomingley alive as a cash cow by going underground and via the regional exploration, it is looking to see if Peak Hill is viable as an underground operation, has multiple exploration projects in the local area, I look forward to the drilling result that should flow in the near term, including the drilling at "Trangie 45 aircore holes totalling 3,242 metres were drilled in a ‘cross’ pattern over the magnetic anomaly. Confirmation of the bedrock is still to be determined but a carbonatite type body is probable. Analytical results are anticipated in the coming quarter. "
Wish that some follow up drilling would happen at the Northern Molong Porphry Project, as the initial drilling results look like there is a potential.
ALK still has large amounts of cash/bullion so at least it will not be going back to the market in the near term for funding. Still not sure behind the logic of the 2 investments but hopefully this will be better explained at the AGM.
That all being said I am extremely frustrated at the lack of visible progression for the DP towards production and the fact that there will be a cash flow gap between the end of the open cut and the beginning of the underground mining at Tomingley.
I could add that the on market buying by the directors is usually a positive sign.
(20min delay)