A contrarian's view for those interested.
Julian isn't a slick presenter/interviewee. That shouldn't matter unless SVM is just in the fashion business selling what's hot instead, which they are not. Personally I prefer, and believe serious investors/funds prefer, genuine, unembellished communication and there is no doubt Julian has that reputation (humble, long haul, hard working explorationist).
Matthew is a professional interviewer but his job is to provide a platform for companies to positively showcase their projects and ask soft leading questions (otherwise they wouldn't participate). I've saw Matthew interview BSE CEO Time Carston last year, Matthew knows full well the industry basics, researches companies and shares his questions before interviews etc. His job is to play dumb ("so what is SVM's split between ilmenite and rutile"..lol), ask the leading questions that allows the CEO to make their points to the audience. Matthew did a terrible job, kept stumbling and repeating his questions, questions that often didn;t give Julian anywhere to go. A politician would have side-stepped the questions and just delivered the message they wanted anyhow, Julian obviously isn't going to be a politician.
A CEO can't say anything about off-take deals that haven't been signed, make economic claims before even a scoping study has been done, deny SVM will be back for more capital before and after the PFS, pontificate about the share registry or the Messiah Middlemas... all he can do is talk up the project's results to date, MRE and future potential (which he tried when given a chance). Nobody can say he isn;t a believer who's confident they have a world class asset.
Potential and results are already baked into the share price and MC imo. As Julian says, it's obvious to everyone and has been for a while the size the rutile opportunity over SVM's expansive landholdings... can't expect this knowledge to keep adding value like some magic pudding. Well done on the multi-bags to date, but the market is looking forward to how this will translate into valuation and be monetised (either through ongoing CR dilution to mine development of M&A). I see considerable mining uncertainties (eg grade vs ore type vs capex vs opex etc) and project development risks, I'm probably not alone.
The two recent interviews (one more comfortable watching than the other) give some hints reading between the lines imo.
Graphite to be spun out somehow to realise shareholder value and avoid distraction/dilution of the much more valuable rutile potential (and because graphite's development window is rapidly closing imo and will not be available by the time a rutile mine is up and running).
Looking at developing a mine on the upper high-grade soil/FERP zone ore (+/- some mottled zone). Hydro-mining is possible in the friable soil/FERP zone but I just can't see it working in the palid ('plastic') zone or saprolite (too high clay, too consolidated to work), but Julian mentioned it with some conviction (still think hydro-mining highly unlikley even in upper HG zone).
The key to SVM's rutile value requires understanding the high-TiO2 feed pigment market. Short or long term rutile supply deficits are relatively unrelated to the pigment industry which relies on a vastly larger ilmenite-slag market. There was already a large price premium in rutile reflecting rutile's preferential pigment feed characteristics, but also the demand for rutile specific end uses (eg ti-metal, welding). Rutile has and will continue to be reduced in pigment plant feed blends for economic reasons (slag is cheaper per unit of TiO2) and rutile's supply is going backwards as TiO2 feed requirements are inexorably rising (rutile cannot come close to feeding the world).
Maybe 20% of Chloride pigment plant feed is currently rutile, and none into sulphate pigment plants. Say roughly 10% of global TiO2 pigment is rutile, natural rutile only has to price a little bit higher than the 'all in cost' of using slag or syn rutile feed and demand (price pressure) stops. Maybe the rutile supply deficit gets so chronic the rutile price rises even further long term to meet Ti-metal and welding requirements... maybe not. Maybe Sierra Leonne will not let ILU's Sierra Rutile close down for good, maybe ILU has rutile rich deposits in the Murray Basin to bring on?
Ultimately, TiO2 feed is fungible and substitution between natural rutile and slag/syn rutile is driven by cost and practical volume availability. 50% TiO2 ilmenite @ $200/t = $4/TiO2 unit. 86% TiO2 slag-rutile @ $950/t = $11/TiO2 unit. 95% TiO2 Natural Rutile @ $1200/t = $12.65/TiO2 unit. A Carbon tax or off-set market will marginally add to the cost of slag/syn rutile (and thus push natural rutile same amount higher to stay out of the game). Slag-rutile is the future (not syn-rutile) because of abundant ilmenite availability and highly valuable pig-iron steel the process produces (slag-rutile is literally the ilmenite waste floated off the steel furnace). Profit margins on converting ilmenite to slag can be >$400/t of slag-rutile product, more than enough to carry ~$50/t carbon off-set tax if/when it comes in. Natural rutile pricing continuously oscillates by more than slag-ruitle's carbon tax, over years trading in a range between $800-1200/t.
A lot of water to go under the bridge before the market get's a good handle on exactly what type of opportunity SVM has here. Scoping study will give some idea of direction and costs, although traditionally SS are highly optimistic regards variables, risks and time lines. As usual, project value will be most sensitive to product pricing assumptions so it's worth understanding the market and inter-related demand-supply dynamics.
Expand
(20min delay)
