A Mega Mine, NSW lateritic clay belt, page-91

Hey DMac,

I'm invested in PGM for the scandium potential so it was very interesting to see in the Sunrise DFS that while CLQ are initially targeting production of 10tpa scandium oxide (Sc2O3), they will actually be processing sufficient ore to produce 93.5tpa Sc2O3 and stockpiling it in a partially processed state as scandium hydroxide Sc(OH)3 for later processing as the market develops. They have also factored in an 80tpa Sc2O3 refinery in the capital costing so they will easily be able to ramp up Sc2O3 production when there is market for it. Also in their 'Scandium Upside Sensitivity Analysis' they drop their price assumption for Sc2O3 from US$1,500 in year 1 to US$750 in year 7 as production rises from 10tpa to 80tpa to reflect changes in the supply/demand dynamics.

If all the DFS/BFS scoped Sc2O3 projects in Australia were to come into production (CLQ's Sunrise - 10 to 80tpa, AUZ's Sconi - 50tpa, SCY's Nyngen - 38tpa) and you also add PGM's Owendale - 42tpa and AUZ's Flemington - 50tpa and whatever might be in development oversees, it is hard to see how the long term price assumption for Owendale PFS of US$1,500 for high purity Sc2O3 could hold up, so it will be interesting to see what figures they assume in the DFS.

One thing for sure is that not all these projects will eventuate, particularly the ones with high production and capex costs. Fortunately for PGM investors Owendale's PFS costings of US$462/Kg Sc2O3 and capex of US$95m are the best of the bunch at the moment, so if PGM's new management can secure a Sc2O3 takeoff agreement on the basis of the upcoming DFS we might find ourselves in the hotseat to get developed.

Cheers, marcusA.