re: zfx tantalum play/be careful
If you are interested in ZFX'S possible aquisition of the Sgw assets just make sure they have a reasonable back up tantalum resource as Sgw's mines are not exactly brimfull of cheap,easily mineable resource.They have a tie up with HDN,problem being that HDN has only 1 years supply left and they have yet to drill and prove up a resource that could be used by the Sgw processing plant on their tenaments.They are apparently prospective for tantalum.Question is is it economically mineable.Much will have to be brought together before SGW's assets would be profitable again not the least being the contract price on the other main tantalum off-take with Cabots which has to be settled through arbitration.This may happen by March by all accounts but Cabots Kennet Burns has stated they will not pay an unnecessarily high price for the Sgw product.Cabots also hold security over Wodgina in case Sgw was not able to supply from this mine.Just exactly what form the security takes is not known but they have mooted if it came to worst case scenario they would run the mine themselves.Cabots already run their own mine in Nth America,so they certainly know how its done.
If you can find it have a look at CIBC's report on SGW just before SGW's sp started its move south ealier in the decade.Makes interesting reading espc the costs of production per pound of tantalum 3 years out.Whether the 20 odd million that the creditors and Ferrier Hodgson have thrown at the mines can bring the costs of production down to make these assets profitable is up to analysts and ultimately the actual production of the product.
Good luck to ZFX.Yes they have done nicely with the old Pasminco assets BUT tantalum is a TOTALLY different industry that is run by the two major intermediaries of Starks and Cabots that produce the powder and wire for the tamantlum end point user industries of which the main users are capacitor products for various electronics sectors,primarily personal mobile electronics, TV's and games stations and automotive capacitors as well as the aerospace industry which uses tantalum primarily in coatings for high temperature applications.
So ZFX will have to prove to investors that the 500M plus(probably more) that they would have to pay for these assets is money well spent and they can become a major supplier with operations that are PROFITABLE.Because in their current guise it is questionable that the Sgw assets are a long term proposition unless HDN can come up with a long term mineable resource.
Only my opinion though.
d.
ZFX
zinifex limited
