You must be new, that will be unpopular, and I did save anyone...

You must be new, that will be unpopular, and I did save anyone who listened money with my first post and sell sentiment at 2.7c Jan'20. Changed my sentiment to none long time ago to recognise in this bull market MRQ looks comparatively cheap to everything including shell companies and mineral sands is complex enough a good story can be spun from almost anything and most wouldn't know what it all means.

Take SF2TH for example. Have seen enough of their good effort across HC to believe they are genuine in their efforts to understand projects and promote stocks investing in. Not sure of their technical background, but either through complexity, direction from management or both put out long winded technical analysis which is way too optimistic and demonstrably inaccurate. If enough punters follow, twitter has a pile on and tech traders chance the price volume spikes then analysis doesn't matter anyhow.. well done. Fundamentals matter longer term and unfortunately facts keep getting in the way of a 'good story'

Let's quickly consider the merit of SF2TH's hugely popular last piece of longwinded analysis (https://hotcopper.com.au/posts/59413928/single)
That spreadsheet of production, recoveries, profit, NPV is almost impossible to follow or make sense of. Whether on purpose of lack of time, it's so opaque and obtuse readers are left with little choice but to look at the huge bottom line profit/NPV numbers and upvote with confidence inducing conformational bias. Here are the numbers sensibly walked through based on the actual final KM Metallurgical Report 26 Aug 2020 (aka, the facts).

First process is extracting HM from the sand through Wet Plant (WP), where most HM goes to the HMC for further processing and some is lost to tailings. The HMC is not pure HM, in MRQ's case the HMC is 77.9%, 22.1% sand. The WP HMC contains only 83.0% of the original HM in the ground. Individual recoveries to the WP HMC below, translating to ~1Mt HMC derived from 17.5Mtpa @ 6.2% THM put through the WP (ie 17.5Mt* 0.062*0.779 /0.83)...



That WP HMC is then fed through a Concentrate Upgrade Plant (CUP) which produces 3 product streams and the rest is tailings into the pit void.

44.3% of the WP HMC goes into an early Ilmenite Con. Regardless of what ilmenite has been lost to date or other trash minerals in this CUP ilm con, that is what the plant has left to work with.

That leaves 450kt of CUP Ilm Con sent to the Ilmenite Plant (IP) for more electrostatic and mag separation, recovering 82.8% of the CUP Ilm Con into a higher TiO2 IP Con (now 43.5% TiO2).

The IP Con is then fed into a roasting plant to remove chromite contamination (LTR Ilm). 89.2% of the IP Con is recovered to the final LTR Ilm product, which has a TiO2 = 47.1%.


That final 333,000t of Ilmenite product from a 17.5Mtpa operaation is low end of ilmenite TiO2 content, and ilmenite is priced based largely on TiO2 units per tonne (ie more TiO2 units = more TiO2 pigment product per tonn, and the price rises more than proportionally with TiO2 % in recognition of the cost savings and desirability of processing higher TiO2 ilmenite in pigment plants). If market pricing for 50% TiO2 ilmentie was $200/t, then 47% Ti)2 ilm would be priced at $188 on prorata basis. BSE had TZMI long term pricing in Sep'20 of 50.5% TiO2 ilm = USD$199/t and 48.4% ilm = USD$189/t which is pretty much pro-rata on TiO2 content.

The company and punters are free to insert whatever short, medium and long term product pricing floats their boat, though you can be sure financiers and development equity players will be using realistic price/cost assumptions that reflect reality. If, as SF2TH suggests, Hi-Ti (rutile-leucoxene mix) in CUP non-mag stream is further processed out and tipped into the LTR Ilm product mass balancing can only lift the TiO2 grade from 47.1% to about 48% tops. Won't bore you with the maths, but~10% Hi-Ti recovery from the 3.9% CUP non-mag stream is 4000t @ 92% TiO2 which hardly moves the needle on 333,000t of 47.1% ilmenite. Assuming USD$200/t LT prices for 48% TiO2 ilm (4000t Hi-Ti add-back) ilmenite revenue from the 17.5Mtpa @ 6.2% operation is thus.


Following zircon through the met flowsheet and a 17.5Mt plant gives the following zircon tonnes and value in a non-mag con product

I have been generous by not discounting the zircon for only being "Standard Grade" as per the IHG Robbins Met Report met report (possibly owing to the high U&Th in the non-mag con which may reflect high U&Th in zircon?). Again, players going to insert whatever bullish zircon prices suit their purposes. US$13M is not a huge amount of money, and given the very low tonnes of contained zircon produced even very high zircon prices won;t move the needle much.


This leaves MRQ with a Total Gross Revenue (Ilm and Zir combined) of US$88M, or US$5.00/t or ore processed. The annual operating cash cost of BSE Kwale mine in Kenya, Toliara;s planned mine in Madagascar, Savanah's Mutamaba Scoping Study 2017 (down the road), Sierra Rutile mine in SL, even SVM's Dec'21 rutile scoping study are all north of US$70M per annum. Add in another $10M for G&A, exploration, corporate etc and a large African mine such as MRQ are contemplating needs US$80M just to wipe it's face assuming no debt, no interest, no repayments etc. Cash costs have to be US$4/t ore on a 17.5Mtpa plant before considering the global resource cost inflation scourging the world....

New mines need ~2:1 revenue to cash cost before financiers will even waste time talking with them. Just can't risk huge sums of capex on a marginal new mine that could fall over sending everyone broker first production problem or fall in commodity price obviously. Even assuming outrageously low opex figures and high ilmenite prices won't make sense for MRQ imo, there just isn;t enough Ilm, Zir or Rut to make margin when plenty of much more profitable deposits are all jostling to get developed and fill the demand gap over next 10, 20, 30 years (they are nearly all large, long life projects of course).

Only Ti-Mag credits look like lifting revenue into something resembling a realistically profitable operation. No doubt Ti-mag will feature prominently in the VHM suit of products headlining the pending SS. World is full of failed Ti-Mag, V-Mag wannabes, hostage as they are to fickle iron ore, steel and vanadium pricing. Those interested in fundamental and want to get ahead of the game should start researching the Ti-mag, V-mag market imo...

Good luck