Imperial Mining CEO Peter Cashin joined the Investing News Network to provide an overview of the scandium market and its many use cases.
According to Imperial Mining Group (TSXV:IPG) CEO Peter Cashin, scandium-aluminum alloys have numerous industrial applications. It is corrosion-resistant and 40 percent lighter than titanium alloys, which has captured the attention of automobile and aerospace manufacturers.
In the interview below, Cashin touched on Imperial Mining’s marketing efforts in Europe. He has determined that automobile manufacturers are interested in using scandium, but are unwilling to work with companies in jurisdictions with environmental liability concerns. Additionally, automobile manufacturers are looking for the right price before they initiate R&D programs.
According to Cashin, Imperial Mining has negated such risks with its Crater Lake scandium project in Quebec, Canada, a world-renowned and reliable mining jurisdiction. He believes that once in production, Crater Lake could make a return at a market price of $1,200 – the ideal rate for manufacturers.
Cashin also provided an update on Imperial Mining’s exploration activities at Crater Lake and its Opawica and La Roncière gold properties, as well as the Carheil-Brouillan copper–zinc property. The company is currently drilling at Crater Lake and hopes to release a preliminary economic assessment (PEA) by the end of the year. As for the rest of Imperial Mining’s projects, the company has planned drill programs for its gold assets and its partner SOQUEM is drilling at Carheil-Brouillan.
Below is a transcript of our interview with Imperial Mining CEO Peter Cashin. It has been edited for clarity and brevity.
Investing News Network: What is scandium and what are its uses?
Imperial Mining CEO Peter Cashin: Scandium, like titanium and lithium, is a light metal used in the aluminum alloys. It re-crystallizes and refines the aluminum grain size and is corrosion resistant. Scandium-aluminum alloys are also strong and approximately 40 percent lighter than titanium alloys, making it an attractive metal for the aerospace and automotive industries.
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NN: Being 40 percent lighter will make a substantial difference in larger vehicles, correct?
PC: Correct. We’re actively looking downstream. We’re finding early adopters in the automotive industry. We’ve been marketing in Europe due to the fuel efficiency and greenhouse gas initiatives the EU is implementing. In the EU, most lightweight products such as carbon composites, titanium alloys and high-strength steels can’t provide the characteristics automakers look for when lightening the chassis. Our peer, Robert Friedland, calls scandium a “spice metal”. A sprinkling of scandium, up to 0.4 percent, will almost triple the mechanical characteristics of an aluminum alloy.
INN: Scandium is primarily produced in Russia and Ukraine, but Imperial has a property in Canada. What is the benefit of being located in Canada?
PC: Mineral policies in Canada are geared towards traditional metals, such as copper, zinc, gold and silver. After the rare earth elements (REEs) boom in 2009, the Canadian government recognized the value of these metals. Scandium, for example, has unique characteristics that can help reduce vehicle pollution.
Car manufacturers are looking for a stable supply of scandium before they invest in R&D. They want to ensure that they can repay their R&D investment. We believe that our Crater Lake scandium project can provide that material.
INN: Have you found a reliable source of scandium?
PC: We have one resource that can sustain 20 years of production. We also identified additional targets that we intend to drill because they might triple the grade of what we’ve found. We’ve also released a robust preliminary model for one deposit.
The market price for scandium is currently $2,500 per kilogram but it has also jumped to $20,000. Our market research and talks with auto and aerospace executives indicate that the industry is price sensitive with a tipping point of $1,200 per kilogram of scandium. Our financial model is $1,500, but we could make a fair return at $1,100. We’re in the sweet point the auto industry wants and we believe they’ll adopt the material.
INN: Why are you working directly with manufacturers?
PC: Technology metals, such as titanium, lithium and scandium, are not mining development opportunities, they’re industrial development opportunities. Scandium has a broad consumer base and can be used in manufacturing, the aerospace and automobile industry, fuel cells and 3D printing.
INN: How is scandium used in 3D printing and modeling?
PC: It strengthens and is durable, allowing manufacturers to make complex parts. There are also internal cooling channels that cannot be recreated using conventional casting. For example, Boeing (NYSE:BA) stated that they used 3D printing to manufacture a Dreamliner, saving them approximately $3 million per plane.
INN: Is there a market for scandium in the automotive industry?
PC: The market is there for scandium. It brings the durability and weight of aluminum to the industry. We just need to outline the benefits of having a scandium opportunity in North America.
INN: How do high-end vehicle manufacturers like Porsche (OTCMKTS:POAHY) and BMW (FWB:BMW3) benefit from sourcing scandium from Canada?
PC: European manufacturers are concerned about environmental sustainability. It’s to the point that they shy away from direct involvement with resource development projects due to environmental liability concerns. Canada respects environmental sustainability and social licensure fosters positive relationships with stakeholders. Canada is also a renowned mining jurisdiction because we’re reliable partners.
INN: What impact will CETA have on Canadian suppliers?
PC: The comprehensive economic and trade agreement (CETA) between the UN and Canada will eliminate another level of risk. It addresses tariff prices associated with trading commodities, like scandium, with European manufacturers.
INN: Please tell us about your base metal and gold assets.
PC: We just completed our reverse take over of a Quebec-based base metal and gold company in January 2018. Our base metal and gold properties are outstanding in their own right and add value to Imperial. I know investors are concerned about companies with diversified interests, but I’ve had success in many commodities.
INN: What’s next for Imperial and how does this fit into the company’s long-term goals?
PC: We’ve completed a lot of preliminary work and have identified additional higher-grade targets at Crater Lake. We recently mobilized our drill crew and hope to bring a target into the inferred category in April. After that, we plan to release a resource estimate in June. We’ve also hired a European metallurgical company to help us develop a scandium recovery flowsheet, which will take us into the fall. Our goal is to release a PEA by the end of the year.
The German Aerospace Center in Stuttgart, Germany is also helping us understand the scandium market for the transportation industry. We also have plans to drill our Opawica and La Roncière gold properties. Our partner SOQUEM is currently drilling at our Carheil-Brouillan copper-zinc property.
INN: Is the German Aerospace Center working with you to help consolidate the market?
PC: They’re part of the R&D consortium we’re forming to build on existing scandium-aluminum consumption areas and to open new markets.
