Scandium International Mining Corp. (SCY.TO) coverage was initiated in May 2017, with subsequent notes issued on September 2017 and February 2018. Since our last note, the following releases were issued.
March 2 - Non-Brokered Private Placements of $1,0M (5,7M shares) - priced at C$0.18 per share. Proceed for general working capital, and specifically for the advancement of the Nyngan Scandium Project in NSW, Australia. Also reported that 97% of the funds were from insiders.
Mar. 5 - Initiates Pilot-scale Program for Scandium Master Alloy Production and Filed US Patent Protection on Process. Alcereco Inc. metallurgical research facilities in Kingston, Ontario, to confirm and refine previous work on the manufacturing of aluminum-scandium 2% master alloy (MA). The pilot program is expected to begin in March 2018 and complete in Q2 2018.
Mar. 23 - Insider Purchase: Scandium Investments LLC acquires 2.7M at $0.18 cents.
Apr. 23 - Private Placement $0.9M of 5M shares, priced at C$0.18 per share by Rothschild Asset Management.
Proceeds are for the advancement of the Company's Nyngan Scandium Project in NSW, Australia
Apr. 30 -Signs Letter of Intent (LOI) with Grainger & Worrall Ltd. (GW) to Test Scandium Alloys in Casting Applications. GW intends to report the results of the testing program utilizing their scandium-containing alloys upon completion of the testing period (a minimum of 6 months).
GW is a leader in precision sand cast technology, servicing a range of customers in performance automotive and motorsports industries
May 3 - Signs LOI with Eck Industries Inc. to Test Scandium Alloys in Casting Applications. Eck Industries is a privately held manufacturer of precision sand cast parts, and engineering services, using both aluminum and metal composite alloys, servicing a global customer base.
Ekc's customer segments include commercial aircraft parts, automotive and trucking cast parts, military drive train casings, marine propulsion system castings, and military aerospace components.
May 8 - Closed private placement of April 23rd. 6M shares at C$0.18 per share for $1,0M.
Additional funds of C$0.19M were raised prior to the Closing from a private investor.
May 28 - Barry Davis insiders purchase $0.15 cents (221K).
July 6 - Dr. Nigel Ricketts, VP, Project and Marketing Development, resigned to pursue other opportunities.
The last six months can be summarized largely by two principal components: a) Letter of Intent (LOI), and b) Financing and Insiders.
LOI
The addition of Grainger & Worrall Ltd. and Eck Industries, add to an existing list of recent "partners": Alcereco, AML Technologies ("AML"), Ohm & Haner Metallwerk , and Granges AB is impressive. This brings the total to six impressive LOI.
As SCY.TO adds partners, the critical path of test results gets extended by a six months rolling window at a minimum. Moreover, one can assume that it is the only the beginning as these results are preliminary in nature and will require potentially more rigorous testing by the actual end clients.
Financing and Insiders.
Two private placement took places in the last six months. One had 97% insiders participation, the other had Rothschild Asset Management as a primary participant. In addition, there were two insider purchases, including one from Scandium Investments LLC.
There is no doubt that SCY.TO has been able to attract high profile investors, many of which continue to re-invest in the company. However, from a capital funding perspective, the investor base is relatively narrow and it certainly feel that the mainstream markets have not "bought in" yet. Funding is for the most part non-brokered, or directly through large asset management firm explaining the current valuation.
Summary
Though the chart shows that SCY.TO is trading on a positive note of late (+ RSI, + MACD, and renewed accumulation). It is still valued below $0.20 cents. Hence, the numerous LOI, financing, and insider activities have had little impact on valuation for the period. Granted these are not revenue generating activities but are nonetheless crucial to narrow the total addressable market - and in hindsight a necessary step.
The CEO of SCY.TO reports that the company is in the process of building an "Off-take portfolio", which it intends to use as a vehicle to raise funds to build a mine for its Nygam project in 2019 - a quick synopsis can be found here. SCY.TO also has clearly made the case in its investor presentation, citing: "Goal is completion of offtake agreements as top priority for team in 2018."
The actual success of this strategy is yet to be determined. After all, there is a relatively small quantity of Scandium, and building a market may require more time (beyond 2018). Thus, it may not automatically transmit into offtake and an instant $100M funding.
Even if SCY.TO has deep pockets, history has showed that the principals prefer to invest in the company operations and consolidate ownership rather than spending on mining infrastructure. The resignation of Dr. Ricketts certainly raise some questions to this effect.
Be as it may, despite its recent progress, SCY.TO is currently not getting the market's attention. Unless it surprise the market, it may be more of the same for a little longer but remember that old ad age: "Progress is not-linear".
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