Scandium Project

The following is the economics for the Scandium project. Hope Management is working overtime to get an off-take agreement!

Stage 1 Annual Production 20 tonnes
Stage 2 Annual Production (from Year 5) 40 tonnes
Life-of-mine for financial model 30 years
Net Present Value (8%), real, after-tax $US166 million AUD$234 million
Internal Rate of Return, post-tax 29%
Payback Period (undiscounted) 5.3 years
Stage 1 Capital Expenditure $US48.1 million AUD$67.8 million
Stage 2 Capital Expenditure $US11.1 million AUD$15.6 million
Total Life-of-Project Capital Expenditure* $US104.1 million AUD$146.5 million
Life-of-Mine Average Cash Operating Costs# 525/kg 739/kg
Life-of-Mine Scandium Oxide Price 1,550/kg 2,183/kg

SCANDIUM FAQWhat is scandium?Scandium is an element, often lumped together with the rare earth elements as is yttrium, but it is technically a light transition metal. It is relatively common in the earth's crust, where it readily forms as a compound oxide and tends to remain highly dispersed (low grade). Heavy weathering of surface soils can concentrate scandium, such as is found in lateritic clays in Southeast Asia and Australia, some of them better known today for their concentrations of nickel and cobalt. Scandium does sometimes also associate with platinum, titanium, uranium, iron ore and tungsten, although association with nickel is more common. Scandium can also be found in pegmatite formations, very old geologic fluid formations that typically also contain other minerals, metals and rare earth elements.Who supplies scandium today?Scandium is supplied today either as a co-product of other primary metal projects, often from diverted leach streams, or is reprocessed out of old tailings from exhausted mining projects where the specific process happened to concentrate scandium levels. Russian sources have used iron ore/uranium mine tailings, while more recent Chinese sources have exploited residual scandium in TiO2 leach streams in pigment plants. The Chinese do have scandium in tailings at Bayan Obo (Iron ore/REE, Inner Mongolia), and are rumored to have other secondary sources in central China.How much scandium is available?High grade scandium oxide (scandia) product is scarce and typically not available in any significant commercial quantity. The world supply is estimated at 10-15 tonnes/year, although true production is impossible to determine and could be considerably higher. Production capability we believe is certainly higher, perhaps double this sales estimate. There is no orderly and transparent market for scandium oxide in its various grades, and sales are organized at agreed prices between buyers and sellers. Specialty minerals distributors can provide scandium oxide in small lots, suitable for research, but at premium prices.Is this 'no supply' dynamic likely to change?Yes, and very soon. Today's high prices and strong interest in scandium's uses are driving many re-processing activities to recover scandium from low grade sources, and supply is increasing as a result. The big change will come from newly recognized lateritic clay sources in Asia and Australia, where much more significant volumes of scandia can be produced at cost levels at or below the re-processing opportunities. The NSW laterite clay belt holds a unique production advantage, with high-grade significant resource size, and a single product focus that can quickly bring supply to market at prices that will promote absorption and growth.What are scandium's uses? What is scandium's value proposition in these applications?Aluminum-scandium alloys will likely be priced at double the cost of typical transportation alloys (the 2X and 5X family of Al alloys), but they will offer up to twice the strength, full weldability, and corrosion resistance in wrought alloys that aircraft manufacturers can utilize to save weight, cut build costs, and extend airframe life. Automotive usage is more likely to begin in the cast alloy applications (engine components) due to heat tolerance and creep resistance characteristics, rather than wrought applications based on strength and construction attributes. The best designed SOFC's today are based on scandia-stabilized zirconia electrolytes, and scandium is the best known doping agent for this purpose, improving power density, lowering operating temperatures considerably, and extending unit life to 10 years (10X).