deal or no deal....peppie??, page-10

I've been buying a few down here and will continue to do so. I'm actually quite shocked that it's below 10c with a plant on the cusp of producing. I do realise the trades running through are small, and could well be the start of some tax loss selling, also the European crisis and commodities in general are on the nose, but there are many positives to this project that far outweight the negatives.

The company has told us three weeks ago, that the plant will be running at name-plate sometime this quarter. Okay, even if we say it's June 30 (the last day), that's only 5-6 weeks away. Some might say, that we've been let down before, and to a point, that's probably true, but it should be highlighted that some of the issues have been outside their control, and we all know that new projects have issues, but remember this plant will be around for 25 years plus, it has grades that are found no where else, and it's making a new product that has never been seen anywhere in the world, which could revoluntise the foundry industry.

The board have just made a new appointment - Wayne Knott as the COO, and by looking at his credentials he's a fairly smart boy from a very strong mineral sand background. Now if he thought this project wasn't going to make it, or he thought he couldn't get it running at the level required, or the product wasn't the real deal, would he pull up stumps here in Australia and re-located to the U.S.? Think about that.......

Now the last quarterly showed us revenue of $1.5m, break even is around $4m. I suspect that much of that revenue is derived from Zircon sales, so just factor in a very small portion of Spherichrome sales and a few bags of High Iron Ilmenite and the other $2.5m is clearly within reach. (I should mention that a Zircon circuit is nearly identical to a chromite circuit, so any adjustments being made could quite possibly be increasing Zircon output - thus increasing sales).

So for me, we have three hurdles to jump.

1. Management getting this plant to name-plate.
(Name-plate for me is production numbers with the required recovery rates for each product).

2. Spherichrome being accepted by the industry as a bonafide replacement to Zircon.

3. Sales of Spherichrome.

I am convinced that Barry Bolitho will get this job done and that you are witnessing the next big thing in the mineral sands space.

Regards
Pep

(Not advice to buy, just my thoughts).