An interesting discussion on ilmenite prices which appear to be...

1. An interesting discussion on ilmenite prices which appear to be heading north and rapidly!
   
   http://www.*.co.uk...minerals-plc-strongbow-exploration-27469.html
   
   BlueJay Mining* (LON:JAY – formerly LON:FAM) 13p, Mkt Cap £81m – Ilmenite price rise on supply shortage suggests better days for titanium mineral sands producers
   (formerly FinnAust Mining)
   BUY Target Price to be revised on higher ilmenite prices
   • Titanium concentrate prices have risen by some 69% to around $180/t according to independent and other sources, eg Bloomberg (Metal Bulletin) prices.
   • Spot prices are said to have been moving higher for some time for inland Chinese spot sales with contract prices catching up for international producers.
   • Stockpiles of titanium concentrates, eg titanium slags and ilmenite concentrates which had served to depress prices through the last couple of years are said to have been used up.
   • Supply: high iron ore prices had attracted titanium and vanadium rich magnetite into the market on the back of higher iron ore credits.
   • The pullback in iron ore prices last year ended much of this production causing many titano-magnetite producers to shutdown. Chinese moves to limit polluting and loss making production of steel and in some casts mining has also served to reduce supply and demand for these types of ores.
   • Some new supply may come on from India and Vietnam in the next 12-18 months with the reopening of idled mines which may curb excessive spot prices in China next year.
   • Demand: there are a number of drivers for demand. Pigment producers are said to be working at full capacity to meet demand and make up for lost production from two fire damaged plants. Pigment prices are said to be at a level where they can afford higher ilmenite prices in order to keep pace with demand.
   • Demand is also growing among titanium powders and wire producers for 3-D printing processes. Companies like Renishaw, GKN, EOS, ATI,
   • already sell titanium powder for additive manufacturing
   • Future demand: we expect a new avenue for future demand to grow in the supply of titanium metal powders for 3-D printing. We understand aerospace and other high-tech engineers are increasingly using 3-D printing to make complex and lighter metal components. You can buy a full metal dual extruder 3-D printer on Amazon for £550 “direct metal laser sintering” so it’s not just the preserve of high-tech engineers either.
   • lmenite prices have risen dramatically to over US$177.5/t a 69% price increase according to Metal Bulletin prices reported on Bloomberg.
   • Industry sources tell us that sulphate ilmenite prices have risen steadily in China since mid last year and dramatically since the beginning of this year due to major shutdowns in Sichuan Province early in the new year. This took around 2.4mtpa out of the Chinese domestic market though some 1.4mtpa has since returned.
   • The shutdowns happened as pigment plants were increasing production with relatively low stock in the market hence the rise in prices. Chloride ilmenite which is less commonly used and requires a purer ore has seen a lesser price increase probably due to its disconnect with Chinese spot ilmenite sulphate prices.
   • The price has moved beyond the expectation of many in the market with pigment producers said to be working flat out to meet demand and to make up for a number of plants which have suffered fire damage.
   • Prices are negotiated individually for contracts with spot prices seen as more normal in China and longer term 3-month and 6-month price revisions said to be common more internationally with 90-day price protection on some contracts.
   • A supply shortage looks likely to help to keep prices higher for longer with pigment producers seen as able to absorb concentrate price increases.
   • Maiden resource estimate: BlueJay are due to put out a maiden, preliminary JORC resource sometime soon. BlueJay drilled some 500 auger and vibracore holes into the Moriusaq Bay and Interlak area with some areas grading >85% ilmenite at Moriusaq and >70% ilmenite at Interlak.
   • Some 260 auger holes were drilled and sampled on raised beaches with 500kg collected for metallurgical testing. Moriusaq Bay samples appear to average >35%.
   • Interlaq delta showed some very high >90% ilmenite grade areas prompting the digging of some 26 trenches >1m deep and 240 offshore vibracore holes in the marine environment.
   • Not all of these holes will be included in the resource and the company reported reduced penetration of drilling in the Moriusaq due to almost pure layers of ilmenite bearing sediments. Eg further drilling will almost certainly increase this part of the resource significantly if more deeper holes are achieved.
   • We refer investors to the map of the drilling, trenching and sampling program: http://www.titanium.gl/
   • http://www.titanium.gl/announcements/completion-2016-work-programme-pituffik-titanium-project/
   Conclusion: Higher than expected ilmenite prices appear to have caught many in the industry by surprise. While there is no surprise that prices have risen off what was seen as a particularly low base the scale and speed of the price rise has surprised many. International prices which are generally on longer-term 3-6 month contracts are now catching up on spot prices in China with pigment producer prices now seen as able to support higher ilmenite prices internationally. The result should be for a marked increase in valuations across the board for ilmenite mines and producers.
   *SP Angel act as nomad and broker to Bluejay
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