Extremely positive announcement and one I understand has been in...

Extremely positive announcement and one I understand has been in the wings for a number of years so certainly not a plan B.  This shows a potential application of TIVAN in the bulk commodities space, not a competing VTi mine.

A bit of background on the Ball Balla and Iron Ore industry.

Balla Balla was acquire by Todd from RTA and has always been slated as a 10mtpa iron ore magnetite mine, requiring $6B in infrastructure spending on rail and port.

Magnetite iron (25% - 40% iron content) differs from hematite iron ore (56% - 65%) as it has less iron, needs the other minerals separated in order to be used in steel manufacturing and therefore is costly to produce per tonne as it requires significant processing.  The end product however is a superior product to DSO hematite at 65% -70% iron content but also costs upward of $70/t to produce.  This was the case going back a few years so not sure if there are too many magnetite iron ore miners still in operation given the price of IO.

Jump forward to today in the IO market, the discount on spot pricing for DSO hematite of less than 60% Fe at the moment is huge.  The gap has been increasing for years and is now structural in the iron ore market, not just a short term trend.  Discounts on FMG ore from earlier in 2018:

1. 58% Fe @ 30% discount to 62%
2. 56.7% Fe @ 40% discount to 62%

In my opinion, with the quality and quantity Vale produce (they only recently brought online a $19.5B mine producing 90mtpa @ 67% Fe) and some monster high grade hematite deposits in Africa like Simandou (2.4Bt @ 65% Fe), China will eventually stop accepting anything less than the 62% benchmark and I understand it may be increasingly difficult to move by traders at present.  This places massive pressures on all miners as high grade deposits (FMG, RH, RIO and BHP) deplete and something like Simandou comes online.

So we’ve now got a magnetite iron ore miner that is interested in TIVAN that if used, would supply potentially 70% pig iron ( and with TIVAN the vanadium) which China will continue to increase required content of V in steel manufacturing.  Titanium dioxide (not pigment) is a side product (likely feedstock) as I highly doubt an iron ore miner would be interested in the pigment bolt on.

Secondary to that you’ve got large hematite iron ore miners (with massive sunk costs) that will continue to have massive holes in revenue due to discounts.  Someone like FMG currently combines ore from different mines to get various blends.  You could certainly see them blending an iron product out of TIVAN to increase the iron content of their blends to plug that gap in revenue from discounts in the not too distant future.  These guys spend $20B on mines…..imagine what they would be willing to spend on technology that keeps they ahead of the curve.

It’s a massive potential application for TIVAN.  The iron ore industry!

Someone mentioned they were disappointed TNG had marketed Mt Peake as the next VTi mine yet looks like Balla Balla will be.  I’m all for it if that is the case as I don’t see them as competing mines.  Balla Balla potentially uses TIVAN for the iron ore market  and TNG will use TIVAN as a strategic metals market (ie.  A tight titanium market that is near impossible to get offtakes and VRB).  Just like titanium is a by-product of value from Todd’s main game, TNGs pig iron is a by-product of value from our main game (Titanium).  Don’t forget that TIVAN only produces Titanium Dioxide, and there is a $350m bolt on to produce pigment.  This just isn’t the bread and butter of what Balla Balla will be and feedstock is worth considerably less than pigment.

On titanium, the statement in today’s announcement about pre-production financing and direct investment in TNG or/and Peake - is that not where the titanium offtake currently sits given our BOOT model?  We are all screaming for an update on the offtake and that is it right there.  Until a mining licence is delivered, I understand an offtake, with a pre-financing and investment, cannot be progressed.