foundry magazine article, page-9

A few parts to your question, that I might be able to answer.

Has the equipment been paid for to reach full production?
They purchased $5.3m in the last quarter for "fixed assets". That could be the new High Tension Rollers to get the plant to 95,000t. But it could have been the last payment for the commissioning of the plant. It may well be a bit of both - deposit new equipment / payment of commissioning, but definitely a fair question to ask the company.

As for money.
No doubt its tight and I wouldn't be surprised if they raised a few bucks to get them through this market turmoil and to full production. If they raised a small amount of $5m, I don't think the dilution would all be that bad. It's a very tight register and the entire Top 20 bought into the last issue at 20c (including MacBank and Sentient), so obviously they still see big things. Should note they would be getting some revenue in, even though I don't think it will be anything huge. I would be guessing that most of that would be from the Zircon as you could sell that on a street corner.

As for the Spherichrome revenue.
Knowing how foundries operate, they won't move over until they've tested it and supply guaranteed - that simple. To do any worthwhile sampling you are going to need to send at least 5 tonnes of product and possibly a lot more to the larger companies. These costs will be borne on the supplier, not the customer. So I would be guessing that's where most of the money drain will be coming from. (Pretty much giving them free samples and sending it for nothing).

However, they will soon work out, especially in the U.S. that it's a far superior product than chromite and on the same level as Zircon at a third the price. It's also closer to home minus logistical issues and increased transport costs from overseas product. It wouldn't surprise me into the future that the majority of their customers will be U.S. / Mexico based, it is the second biggest foundry market and their are only 2 real suppliers of Zircon sand (Iluka and Dupont) and zero suppliers of Chromite or High Iron Ilmenite. Both Iluka and Dupont's plants are flagged to close in 2014/15 and Dupont use the majority of their feed for their own production.

As for asking them directly about a raising, they won't be able to comment on it.

Your question about Hi Iron Ilmenite and Iluka's Ilmenite/Rutile production.
Products are vastly different in make-up and used in different applications. (try to keep this brief)
The IDM (Hi Iron) is used as an additive and poured into a large steel application mould to keep the temperature constant throughout the entire mould whilst it cools. (the outside would cool before the inside).

Iluka's Ilmenite is used for pigment manufacture (paint) and titanium sponge (high stress components like plane engines).

The IDM HiFe product has never been produced for the foundry industry. This will be another example of the foundry industry accepting a new product once they work out the advantages. Let me just say, a large mould may take weeks to produce, if it cracks, you throw it out and start again. You add HiFe for $235t (you wouldn't need a lot) and you could save a lot of time and electricity, the two biggest expenses in a foundry (Sand is quite small overall).

The HiFe was originally classed as trash and to be returned to the pit, but it was extensively tested for years by Prince Minerals and they worked out how useful it could be. It's now just a matter of the foundries buying it. The product is called Vein Seal HMI on their website and is exclusively sold by them.

The change in presentation figures for HiFe.
I'm thinking the increase would relate to the better understanding of extraction process at the plant and possibly the grades coming out of the pit. This project really is in its infancy and they would still be learning many aspects of the orebody and the plant itself. It could well be that it's selling well in the market place, and its been given a higher priority, possibly giving the company a broader spectrum of sales revenue, but I think they would be concentrating on their two big longterm money spinners - Spherichrome and the Zircon, as the prices are much higher.

Pep