Ilu probably will offer a low ball take over similar to what they did to Kenmare in 2014. I wouldn't want them to have this strategic resource unless they pay for the fair value we shareholders agree.
Based on my research, ILU will soon face the following issues:
1. Jacinth-Ambrosia projected mine life was 16.5 years. The mine commenced in 2010, closing down for 20 months from 2016 to 2017 and restarted at the end of 2017. In my opinion, the mine will run dry by 2026-2027, annual zircon supply loss of 289k.
2.Cataby mine starts in 2019, projected 8.5 years with additional 4 years. If the government doesn't grant the additional mining lease (very unlikely but if a 3.8 billion company relies on this, their fall is imminent), Cataby will close in 2028 (or 2032), annual zircon supply loss of 60k, ilmenite loss of 370k.
3. Murray Basin contains very high percentage of mineral sands (at stunning 16.8% 5 mil tonnes of zircon). However, ILU is still assessing whether it is economical to extract them. Same goes for Ecula Basin.
4. Western Australian mine has only 2 years left
My take on ILU is that if they can economically mine Murray Basin, the mine will last them another 15 years. Their stress will postpone to 2040. Sri Lanka mine mainly contains ilmenite and wouldn't be a bid source of zircon. On top of that, they haven't done a feasibility study on the mine. Otherwise, they have to acquire from junior miners.
What I have researched about smart phone ceramic back starts to come true. Many companies in China starts to boost up ceramic back production. The latest iconic phone is Samsung s10 plus. Please check the review and you will be surprised how good it is. Many large mobile producers are closely watching In the near future, ceramic phone will have 50% market share (might be higher in the long term). Annual zircon sand demand is roughly 60k. 5G just started to roll out. I hope the demand for high end ceramic will increase (most likely because of zirconia ceramic advantages).
The best case scenario is that SFX raises $100 mil and $150 mil from project sell-down.
SFX Price at posting:
51.0¢ Sentiment: Hold Disclosure: Held
(20min delay)
