It's a slow build-up and they are having a few issues and just...

It's a slow build-up and they are having a few issues and just reading between the lines, probably related to feed through the plant and probably the wet mill. I think a major part of the problem will be the very high grade coming from the South Seven Devils pit (I've said this before). Phil Garratt mentioned in the Rodman + Renshaw presentation that the grade coming out is 50%+, which is double the published JORC. You only need to look at the pictures from the presentations to work out these deposits are very different from any other. It's a great problem to have, but it's still a problem. The company has mentioned before that they would want to put a first stage spiral unit in the field to increase the HM prior to transporting it to the plant. So if the grade is the issue, then it needs to be rectified during commissioning while its still under warranty from Outetec.

Both mill times have increased and downtime decreased which is encouraging. The Zircon circuit has been modified to include "non-ceramic product". So otherwords they've tweaked the separators to spit out lower quality zircon, but doubled the volume. The price they would be obtaining for this would be around $1,800 (15% discount to high grade). The "non-ceramic" product would possibly be used in foundries, so it's a good cross-over with the Spherichrome.

"Persistent mechanical failure of components of new equipment have hampered availability and production".
Yep, it's a brand new plant and to be honest this should be expected, but this problem would be highlighted further because of the HM grades coming out of the pit. Remember a normal deposit would be between 2-6% HM, Phil quoted 50%+.

I'm impressed that the tailings filter circuit is working well and they are using it as straight backfill in the deposit. This is a new design for a mineral sands project and I don't believe I've ever heard of another one - definitely not in Australia. Most use ponds and these have issues well after the plant is finished - ask Iluka. Today's picture like others have the stockpile in front of it and I can't see clearly how it works. I've got a suspicion this is design is being patented by the company, which would be very interesting.

It's good to see the reclamation and rehabilitation of the pit has gone well. They must show the county and landowners that once they've finished they will bring it back to better than it was. This will open doors for any further areas they want to lease.

As for the future.
Well I've said it before, it just needs some time to sort out the issues and hit it's straps, remember its a brand new plant that will be producing at least 4 exclusive minerals and possibly another three.

I know that doesn't help the short-termers, but if you are thinking of a timeline of 12 months, I'm sure the share price will be well above today's.

Pep