Although scandium was discovered more than 130 years ago, it wasn't until the 1970's that commercial applications were developed. Scandium has gained attention for its impact on aluminum alloys. It makes it stronger, more corrosion-resistant, heat-tolerant, and yields significant weight reduction. Hence, the first commercial application of scandium were in aerospace.
A major hurdle in expanding the scandium market is related to the supply. Only 10 tonnes per year are mined mostly from Ukraine, Russia and China. It is almost always a by-product and is very difficult to obtain. Currently, there is no formal buy/sell market — scandium is not traded on any exchange or futures markets. Instead, scandium trades between private parties. Scandium prices are estimated between $3,500 to $5,000 per kilogram depending on quality-purity characteristics.
While the demand for scandium far exceeds its supply, the metal has been explored by many aerospace, train, car, and boating manufacturers. Sporting goods and the green energy are other sectors where opportunities exist.
Scandium International Mining Corp. (SCY.TO) believes it has a solution to the supply problem. Through its subsidiary, EMC Metals Australia Ltd, SCY.TO has 80% ownership of the Nyngan Scandium project based in Australia. The remaining 20% belongs to SIL (a private entity).
SCY.TO expects to be producing 40 tonnes of scandium per year from an open surface mine. The company claims to have already produce Scandium from the Niyngan project. In fact, SCY.TO has five patents: four of which are concerned with scandium recovery from laterite,
SCY.TO has one off-take agreement with Weston Aluminum and an MOU with ALCERECO Inc. - a spin off from the Alcan Research labs. However, many more are expected to be coming forth in the next few months. It is also believed that a number of large companies or even a consortium may take partial ownership of SCY.TO to gain a competitive advantage. The idea is that ownership of the source can be profitable along the whole supply chain.
On May 5th, SCY.TO obtained its mining license. While the stock price has been up by 33% in recent months, the acquisition of the mining lease did not move the stock price as expected - some had made predictions of over 0.50 cents per share.
According to the initial agreement with SCY.TO, after the obtaining the mining lease, SIL has 30 days to decide if they are going to: a) convert project interest in equity stake and/or; b) further invest in the company towards the construction of a mine (estimated at $100M). This is believed to be the next catalyst for greater valuation. SCY.TO's management own 30% of the company at 0.37 cents a share and this is considered a decent proxy for valuation.
SCY.TO has long been championed by John Kaiser- he reportedly holds a very large position. We also consider SCY.TO to be a unique opportunity.
We encourage readers to familiarize themselves further with SCY.TO. The most recent investors presentation is a good place to start.
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