why existing shareholders should be very happy, page-3

No problems goldy.

I'm actually surprised that its still under 30c after reading the Noosa conference presentation, but I suppose the market is terrible and everyone has been running for the door, the small caps are always the first to get hit. Don't get me wrong, I've got no problems with the share price down here, I've been doing a little shopping of my own after reading the report.

I was typing a post for HC members last week regarding the HA International report that was presented at the German trade show in early July. I just wanted to highlight the main points of it especially the benefits of Spherichrome over standard foundry grade and Zircon. Here's a condensed one paragraph, now that another report has superseded it.

Its been laboratory proven and foundry accepted to be stronger, pack tighter, require less binder and would be highly advantageous for the foundry's to adopt in full as a replacement for Zircon, especially with the price the way it is, but also be used as an additive to foundry grade. I think the foundries would be incredibly excited about Spherichrome and having the matching Zircon strength and grain structure.

Now I wrote a detailed breakdown and process flow in an earlier post, so I don't need to cover that ground. What I want to focus on is the latest presentation and why IDM is the clear standout in the mineral sands sector. Some may argue this point, but the plant is complete and is 10 weeks from hitting name-plate capacity for a period of 25+ years, the closest to come into production is Base Resources and they are still years away.

Phil Garrat (CEO) gave a presentation last friday at the Noosa mining conference which contained updated forecast production figures. He has only given these once before and that was in Feb 2010 just prior to the processing plant being built. Shareholders would be pleased that the revised figures have increased considerably.

Here are those figures:

Feb 2010
70,000t - Chromite
12,000t - Garnet
3,700t - Zircon
20-35t - High Iron Ilmenite.

July 2011
95,000t - Chromite
16,500t - Garnet
4,948t - Zircon
27,863t - High Iron Ilmenite.

It's a solid increase from the initial report and may have been understated to not over-promise to shareholders, maybe some of the increase has come through via the 4% cut off used, instead of the industry standard of 1%. I know they did some re-work to the plant (which is common) in the last couple of months and have already produced a concentrate in the mid 80% range during initial commissioning, maybe the new workings have got this up and over 90%, hence the increase.

Now Phil Garratt did not give projected revenue numbers in this report, why not?

Probably because the price of all four products are moving around so much that is difficult to give one. Who knew that Zircon and foundry grade chromite would double in the space of 12 months? and where is it going from here? All indications are up, but it would be risky to come out with numbers while still in commissioning stage. He's taken the conservative approach and gone with production numbers. We can work rough $$$ using the new figures, but I think we will see something in the next month or so, once they've got production up to near name-plate. We need to remember that Spherichrome is a product that has never been produced anywhere in the world and we can't be sure exactly what premium will be achieved against normal foundry grade, but I'm sure all will be revealed and it will be well received by all.

I would like to also remind people that this project will be around for 25+ years once the lease negotiations are concluded with the county (which I believe are very close), so I have no concern about the initial revenue numbers not being stated. Just on another point and something Phil has said on many occassions, he wants to pay around 85% of earnings as a dividend each year (Feb 2010 report), something that sits very well with me, especially if both production and revenue numbers climb and the share price bangs around 28c.

Now just a couple of points in regards to the Noosa report.

Leases
There are private landowners that would be knocking down the company's door, here is why.

In the Noosa report he said they will receive between $32k-$130k per acre (its an across-the-board 5% royalty payment based on mineral pricing). Timber growers receive approximately $28k for a tree harvest and they take around 9-11 years to grow to maturity. If the farmer can cut down the trees (get the $28k), leave the land for Phil's crew to be worked on for a period of say 1 year (depending on size of the tenement), and let's say they receive a mid-range rate royalty of $75k an acre and also have the company return it back to timber plantation, why wouldn't they take it? It would be the best money for jam they've ever seen. Let me also say, these growers have been doing it very tough the past decade.

The company is also in negotiations to buy some landowners outright, obviously some of this land has caught Phil's eye and he can see real value in it, this land has not been included in any resource (see the annual report and january quarterly).

County leases - how does it impact the local forest? and why is this land important?
The company only needs 4% of the total forest area to add an additional 20 years of resource. Paleo beach deposits are normally continuous and if they are shallow (like these are) they are reasonably easy to find. The county land has had no drilling since WWII when the original finds were made. People need to remember that the current seven devils pit is only 60ft deep and the resouce begins at around 8ft, so drilling another resource will be quick. Now Phil wants the county to maximise their earnings with timber production and will only work on areas that both have agreed on, which is good, its about having a good working relationship, but might I add there is a lot of land there and Phil has kicked a lot of sand there since 1989, he will know where to go.

The Picture on Page 12 of the HMC.
I have been in this game for a while, but I have never seen a 100% grade of any mineral sand product from a paleo beach deposit. So when they say this project is "unique" I can tell you it is. I'm not sure how this could have been formed at 100% concentration, but that photo is not an illusion. What I can tell you is that they will be diluting that grade before running it through the spirals, if they didnt, they would blow the wet mill up. (what a problem to have).

Magnetic Separators
There's a couple of good illustrations of how they work on pages 17 + 18, I explained these in my earlier post.

Just a question to posters, did anyone get to the Noosa conference and hear Phil speak?

I think that's about all for now, I hope this post has informed you all.

Regards
Pep