Pep - good post. Depressingly accurate for GUN holders. I sold...

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AngryTan

1,048 Posts.

23/06/14

13:42

Post #: 13559590
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Originally posted by Peppie ↑

Base would be doing okay. They will have their start-up / commissioning issues like any project and they have a good spread of sand types. The sovereign issue risk has again shown it's ugly head, but I think they will get that sorted reasonably soon.

As for your other points:

Asia should stay fairly steady and they do like tiles over carpet, particularly China. Also we haven't seen any real pickup in the European market and the U.S. pigment market is a fair way off previous levels (pretty much why Dupont are signing Ilmenite deals with anyone).

As for aussie mines, you are right - their too expensive to operate compared to other parts of the world, hence why Iluka have signed JV's with companies in Sri Lanka and Brazil (and they are fair size deposits), but would you want to spend a wad of cash in Sri Lanka?....hmmmm.

Probably goes back to the point whether the actual market is in surplus or deficit with sands like Zircon and Ilmenite and where it's heading for 2014/15. For me, it revolves around the big three companies that dominate the market (Iluka, Tronox and Rio - 75% of the market). Two of the three have surplus sand, but they are not discounting it (so you could say that sand has found some sort of floor), Tronox discounted in late 2013 to clear surplus (hence why it fell 20%).

Rio and Iluka could ramp up production quickly and easily, so where does that leave other players including new projects?
Well, Base looks to have got through, but I think they were lucky with their financing and timing. If that project was being put up now, I don't think it would make it. (capex of $250m odd).

The other more important point and relative to today is this.
You would need to make your products far cheaper than the big three and you would need a rock solid offtake agreement with a reputable company.

.....something that is very hard to do.

Pep

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Pep - good post. Depressingly accurate for GUN holders.

I sold long ago at 9c (bought in at 17c) so lost a bit. Still like the company though - just wish we had signed up with POSCO when we had the chance. Hindsight is 20/20 of course.

GUN Price at posting: 1.3¢ Sentiment: None Disclosure: Unspecified
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