Mr. Roy
Bonnell reports
ARGEX ANNOUNCES POSITIVE RESULTS OF ITS FEASIBILITY STUDY FOR TITANIUM DIOXIDE INDUSTRIAL PROJECT
Argex Titanium Inc. has released the results from the industrial feasibility study
for its titanium dioxide (TiO2) industrial project. The study is based on a 50,000-tonne-per-year
first-module production facility to be located in
Salaberry-de-Valleyfield, Que. Genivar Inc.,
one of Canada's leading professional services and engineering firms,
was mandated to establish the technical viability of a TiO2 production facility and to provide a development plan and capital
estimate for the project. The delivery of the full report in final
form is expected shortly.
The financial model for the first module was prepared by Ernst & Young
based on information provided to it by Argex as received from
Genivar, vendors, service providers and other third parties in the
preparation of the study.
The financial highlights of the study are as follows:
- Pretax internal rate of return: 40.1 per cent (after-tax IRR of 33.8 per cent);
-
Pretax net present value of $954.4-million (after-tax NPV of $678.3-million) (at 8-per-cent
discount rate);
- Pretax payback period of 4.2 years (after-tax payback period of 4.5
years) (including an initial ramp-up period );
- Production profile of 50,000 tonnes of TiO2 annually at capacity;
-
Estimated life of project for purposes of the study: 25 years.
HIGHLIGHTS
Project total
Revenues TiO2 pigment: $4,355.6-million $4,922.9-million
Byproducts: $ 567.2-million
Operating expenditures * $1,854.4-million
Capital costs Purchase: $ 110.5-million $ 247.6-million
Installation: $ 109.7-million
Contingency: $ 27.4-million
* Operation expenditures include all feedstock and raw material costs.
"The Valleyfield project described by the Study represents extremely
positive news for Argex and its shareholders. The study's completion is
a significant milestone on the pathway to production," stated Roy
Bonnell, the president and chief executive officer of Argex. "The
results as outlined in this news release make a compelling case for the
economic viability of the project.
"We believe that our ability to secure project financing, which is
non-dilutive to our public equity, has been greatly enhanced because of
the highly positive economics contained in this study, the TiO2 purchase agreement we have signed with PPG industries, and our
expectation that Ressources Quebec Inc., a subsidiary of Investissement
Quebec Inc., will be an important partner as we move forward. Based on
our discussions to date with current institutional investors, other
financial institutions and potential strategic partners, we believe a
significant portion of the capital costs associated with the first
module can be fulfilled at the project level, thereby minimizing
dilution to our company's equity," commented Mr. Bonnell.
The initial industrial module will have a capacity of 50,000 tonnes per
year of TiO2 pigment production. However, it is expected that additional modules
will be added at the current location where they would benefit from
capital investment in infrastructure already absorbed by the first
module or constructed at other locations, following the successful
commissioning of the first industrial module.
"The financing of subsequent modules should benefit from better
financing terms resulting from the cash flow and reduced risks
associated from the operation of the first module. We are confident
that the subsequent modules represent a compelling case for future
expansion," added Mr. Bonnell.
The industrial project planned location is the Perron Industrial Park in
Salaberry-de-Valleyfield, Que., where an existing 357,000-square-foot
industrial site has already been selected. The site is located near the
Port of Valleyfield and the existing CN railway infrastructure.
The main products will be coated and uncoated TiO2 pigment mainly used for architectural paint, plastic and cosmetics
applications. Commercially available sulphate-grade ilmenite
concentrate has been selected in the study as the initial feedstock for
the operation. The study demonstrates commercial byproducts of
significant value will be generated during the processing of the
feedstock, which consequently will minimize costs associated with waste
treatment and disposal.
"Argex is actively working with its vendors and consultants to improve
on the already impressive results of the study," said Enrico Di Cesare,
chief operating officer and vice-president, technology, of Argex. "We
will also continue to work closely with both the technology providers
to optimize our construction schedule and the engineering team and
equipment vendors to provide a greater level of precision on all items
covered in the study."
During the course of the study, Argex has identified several
opportunities for further improvements in cost saving which have not
been included in the present study. These opportunities include:
- Optimization of the energy recovery between technology islands;
- Optimization of credits from byproducts;
- Further process improvements;
- Optimization of feedstock supplies.
"Work related to detailed engineering should start in early 2014 and
permitting is already under way," added Mr. Di Cesare. "We are closely
working with equipment suppliers, construction contractors and
engineers to commission the plant in the summer of 2015."
KEY PARAMETERS AND ASSUMPTIONS
Pretax NPV (undiscounted) $ 2.8-billion
Pretax NPV (at 5% discount rate) $ 1.4-billion
Pretax NPV (at 8% discount rate) $954.4-million
Pretax NPV (at 10% discount rate) $757.9-million
After-tax NPV (undiscounted) $ 2.0-billion
After-tax NPV (at 5% discount rate) $994.1-million
After-tax NPV (at 8% discount rate) $678.3-million
After-tax NPV (at 10% discount rate) $532.5-million
We seek Safe Harbor.
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