write up in 'the australian', page-2

Reason why there is a bit of action this morning. Good pick up Pep!

Mineral sands looking sweet

COMMENTARY from global mineral sands producers during the earnings reporting season pointed to the worst of the cyclical downturn having passed in what is the most opaque of the commodity subsets of interest in this market.

Broad agreement existed that recovery in demand for zircon (ceramics and porcelain) was under way, and that demand for titanium feedstocks (pigment for paints/plastics, metal and flux for welding rods) while subdued, had stabilised.

Prices are well short of the boom prices of 2011-12 but remain at historically high levels, certainly at levels that continue to offer the type of fat margins that few other mineral commodities exhibit. All that is why the share price of one of the big boys of the industry, our own Iluka (ASX: ILU), has put on 22 per cent this calendar year.

But today's interest is in a little thing called MZI Resources (MZI). It has form as a mineral sands producer from the Tiwi Islands but the building interest in the stock is based on its Keysbrook project, 70km south of Perth. MZI was trading yesterday at 1.2c for a market capitalisation of $30 million.

Back in July, Hartleys had a 4.2c-a-share price target on the stock, with the broker forecasting that the near-term development of Keysbrook could have MZI posting net profit after-tax of more than $32m in the 2015 financial year without anything special happening on prices or currency from here.

So even without might what come from upside of demand/prices to the current situation, MZI is looking interesting.

The more savvy than most resources private equity investor, the Denver-based Resource Capital Fund, is now on board with a 12 per cent "cornerstone" holding it picked up in late June at 1.29c a share.

Perhaps even more supportive of MZI's prospects was its signing up of the king of pigment makers, DuPont, to take the lower-grade component of the product to be produced, and the ability for heavy mineral concentrates from Keysbrook to go to an established finishing plant owned by Doral at Picton, 130km south.

Securing the debt-equity financing for the $70m Keysbrook development is a work-in-progress. Not the easiest of tasks in this market, certainly not for ordinary looking projects. But Keysbrook is far from ordinary.