critical points, page-2

A guru would now everything, I don't - ask my boss.

To your question.

Sales won't be an issue, I'm 100% sure of this.
The Zircon, Garnet and Hi Iron Ilmenite are all contracted with U.S. companies, they will be taking total output. Phil Garratt has said on a couple of occassions that the complete supply of Spherichrome has been contracted for the first year, but watch for extensions to those supply agreements over the next 6 months.

I spoke with a foundry supplier here in WA who is supplying Spherichrome to his clients and asked me whether I had heard of it? (had to laugh) Told me his clients think its better than Zircon because of the lower slime content and will be upping his order "because its so much cheaper than Zircon". From a state where the worldwide production of Zircon is sourced - ironic.

I also know that Amcol has completely forward sold their foundry grade (Hevi-sand) until next year, so if you are a foundry and are looking for supplies instead of using Zircon, look out.

Now what are the possible issues?

I think there are three.

General Commissioning
New mineral sand plants are like moving into new houses, they always take 6 months to get them how you want. Things dont work, you miss things, you need to buy new things, make a few changes to your original ideas etc. etc. This plant will have a working life of at least 30 years, so they will just be doing everything for the long term.

Grade and Grade control
This project has a grade 7-10 times stronger than any other project in the world. When I see pictures of 100% HM, which I have never seen before, I just wonder if they knew this existed and exactly how they will control this through the wet mill. My guess would be that they will blend it carefully at the tenement before running it through mill. I would also be thinking that with a cut-off grade of 4% they will be working hammer and tong to make sure that the plant can run with the very highest thru-put grade, especially with the thought of a mobile rougher unit coming online.

Transport
They are still commissioning and throughput isn't at the required level, so they would be transporting everything through containers via Portland. So I would say that's a bit messy. Once production hits its straps they will contract a barge to pull up along side the plant (the main reason why they located the plant where it is) and take the containers down to San Francisco. Coos Bay was the biggest timber port in the world up until the late 80's, so this should streamline things.

Just give it some time, some of these boys have worked on this for 20 years and they will be doing everything right so close to the finish line. I'm sure that we will have some pleasant surprises in the next few months, Phil Garratt increased their production profile of Zircon to 8,000t from 5,000t.

Pep