Metocean study to help Royal IHC advance preparation for dredge mining

FinnAust Mining have pressed the button on a ‘Met-ocean’ study on their Pituffik Titanium project in Greenland.

“In offshore and coastal engineering, metocean refers to the syllabic abbreviation of meteorology and (physical) oceanography.”

The study is designed to support proposals for dredge mining of the titanium rich sands in the shallow near shore marine environment.

Svašek Hydraulics, a specialist consultant in coastal, harbour and river engineering, will work on the study in close co-ordination with Royal IHC, a large Dutch dredging company.

Svašek Hydraulics expertise focuses on water dynamics (currents and waves) as well as sediment response to these various energy types.

The study by Svašek Hydraulics is designed to give Royal IHC detailed information on marine conditions around the development area to allow the recovery of low impurity ilmenite by dredge mining.

Sierra Rutile offer: We expect the market for titanium mineral sands to improve and gain confidence in this from the ongoing acquisition of Sierra Rutile by Illuka for £215m. Sierra Rutile is expected to produce around 140,000t of rutile mineral sands this year at a cost of around $550/t of rutile valuing the company at £1,536 per annual tonne of production.

Sierra Rutile have an ‘optimised long-term mine plan target of around 225,000tpa through the addition of more dry mining units in Sierra Leone which is supported by the company’s large 8.2mt rutile resource. This compares with Illuka’s own 10.3mt resource and 4.4mt at Kenmare Resources, the next most significant listed mineral sands producer. Kenmare rejected an offer from Illuka some time ago.

The acquisition demonstrates interest in mineral sands producers supported by changing supply demand dynamics in the market place.

Changing market dynamics: Production of titanium concentrates has fallen away as iron ore prices have fallen. Much titanium rich magnetite concentrate production became uneconomic as iron ore process fell from high levels and we expect significant ‘higher cost’ production to come out in China as the government restricts bank debt and moves to cut uneconomic and undesirable production capacity. We can see the effect of this in rising imports for better quality Australian iron ore and the premiums paid for it.

The net effect is that pigment and metal producers now need to source more titanium concentrates from mineral sands producers again. Illuka as the major producer is well attuned to the recovery in demand and we suspect is gearing up for a recovery in prices and in demand for its products.

Kenmare Resources, the other major listed ilmenite mineral producer recently restructured and refinanced its debt through a $275m capital restructuring and open offer. Kenmare used US$200m to repay and discharge US$269m in debt, including Accrued Interest, under the terms of the Amendment, Repayment and Equitisation Agreement.

Richards Bay Minerals production in South Africa has suffered ongoing disruption by local residents who have set fire to equipment, closed roads and threatened to bomb offices.
Ilmenite vs rutile: the terms ilmenite and rutile are confusing for the uninitiated and are closely related. Ilmenite is a titanium oxide mineral in which some of the titanium has been replaced by iron. Rutile is pure titanium dioxide. Ilmenite was named in 1827 after the ‘Ilmen’ Mountains in Russia. Rutile is named after the Latin word ‘Rutilus’ meaning Reddish.

Technically ilmenite and Rutile are different minerals with Ilmenite containing >15% up to 40% iron. Rutile contains <15% iron and other contaminants leaving space for >85% titanium. But, rutile is considered an impure form of titanium. Ilmenite is considered as FeTiO3 (FeO.TiO2) and is often upgraded to produce a near pure rutile FeTiO3. Simple isn’t it!

From a concentrate perspective its all about the TiO2 content with Rutile bulk concentrates at a 95% minimum TiO2 and Ilmenite concs running at a minimum 54% TiO2.

Prices: Rutile prices are currently at around $635/t with ilmenite prices at $105/t. Prices for both metals peaked in 2012 with Rutile peaking at around $2600/t and just over $300/t.
Impurities: The presence of certain impurities in ilmenite and rutile mineral sands can make or break a deposit. Sometimes the concentration of certain impurities can be sufficiently reduced through separation processes but it’s a clear advantage to start off with a deposit with low impurity levels where nature has better sorted the concentrations of titanium mineral sands. Indications so far suggest that the FinnAust’s ilmenite sands at Pituffik are running at unusually low impurity levels.

Conclusion: It is good to see the FinnAust team making firm progress towards the production of a bulk sample to determine the potential of the Pituffik project in Greenland. Indications so far are for the production of a low-impurity ilmenite concentrate which could prove popular with consumers.
If the bulk sampling and metallurgical studies confirm low impurity levels over a large scale ore resource with good prospects for dry mining and or dredging then FinnAust should have a workable and valuable project on their hands. The Pituffik project may come to the market in time to meet new and rising demand by consumers for TiO2 concentrates.
* SP Angel acts as nomad and broker to the company

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