re: Ann: IDM to Ship 11,000 Tons of SpheriChr...
I think it's a strong and positive announcement, but also think it could have been expanded. It doesn't feel like it was written by Phil Garratt (who's away sick), so I'm guessing it was Wayne Knott. Now he has only been in the job for 14 days so he's probably taking the conservative approach.
As for the announcement. I've always stated that for me it needs to tick three important boxes. 1. Get the plant volume and quality right to be able to produce high quality chromite in the range of 42-44%. 2. Have it accepted by the foundries as a replacement. 3. Sales.
Let's go through each of my thoughts with the announcement in hand.
1. The Plant ...the plant modifications have been progressing well and production levels have increased. It is expected that the modifications and enhancements will support the ongoing marketing efforts by providing increased certainty in both product quality and quantity." "also says improved plant performance are gratifying events"
They haven't produced production or recovery rate numbers, but have said numbers and performance have increased. They normally indicate these levels in the quarterly, so I'm guessing they will be in there. But it's definitely positive.
Foundry Acceptance Now I'm not sure whether all have you noticed the link on the announcement, here it is.
You don't need the "www." anymore, so that probably hasn't helped with directing people to it. I would recommend everyone read it.
I found this article to be even more important that the shipment. Columbus Castings is one of the biggest foundries in the U.S. I'm not sure what sort of sand volume they would use, because that depends on the overall amount of castings, but if they are pouring rail components, it would be sizeable.
Some of the comments from the operations manager (Steve Pinkstock) are what people should be focussed on.
Here are some of them. "We found the comparison to Zircon is basically identical"
"We had planning on using SpheriChrome as a substitute, but now we are using it exclusively where we used our own specialty sands"
"if you have those types of results and can save a considerable amount of money, that's just good business"
....Columbus Castings did not vary its process to use SpheriChrome, and the results with the new product made the decision to switch easy.
Some of the large foundries obtain sand from all over the world. They then make their own mixes according to the technical nature of each mould and the type of cast. Zircon is used for high definition moulds, but with the price moving up, many are looking for alternatives.
Just remember, one of the biggest foundries are using it to replace their own sand mixes.
3. Sales They are loading 11,000t on the 20th June bound for China. This isn't a case of "hey, send some over to China". This in the culmination of many months of testing. I would be guessing that China alone would consume 400-600,000t of foundry grade chromite per year. In the scheme of things, 11,000t is probably an initial shipment, but if there is one thing I know about the chinese manufacturing industry, they always look for a cheaper alternative, always.
There would be many chinese foundries that are currently using Zircon, but once they hear what another competitor is doing (successfully), they will be banging down the door to the supplier wanting the same product. (The chinese are terrible for keeping a secret).
Lastly, to the point that someone brought up. "This shipment of SpheriChrome™ is being purchased by a leading marketing company in the mineral sands industry".
This is interesting, we know the distributors for the U.S. and South America (HA). We also know who it is into Europe (Possehl), but Asia is a bit of a mystery. On presentations that I've seen before, they have SI Group and CMC CoMetals. SI are a chemical company and I wouldn't think that CMC is a "leading marketing company in the mineral sands industry", but maybe they do! But again, there logo is on IDM presentations, so why not just say it?
I'm not really sure what to think, if management have not said who it is in this announcement, they won't be telling anyone over the phone, so save yourself 30c.
But all I really care about is packing that ship and sending it to China.
And like FGB has said, the quarterly is going to be mighty interesting, let's hope the chinese payment goes in, sales are increasing in the U.S. and the Zircon unit had a solid production output.
.......that would make it a nice end to a pretty long year.
Pep
IDM Price at posting:
7.0¢ Sentiment: None Disclosure: Held
