Metallica Minerals (ASX: MLM) is advancing its SCONI scandium-cobalt-nickel project in Queensland towards becoming the world’s first major scandium producer with the appointment of mining finance specialist Cutfield Freeman & Co to explore funding options.
Having secured Bloom Energy as a baseload customer and also having received a Scoping Study that demonstrates the project’s likely economic viability, Metallica is now well positioned to pursue funding for the project.
London-based Cutfield Freeman & Co is one of the world’s leading experts in project finance and has provided advice to companies such as BHP Billiton (ASX: BHP), Exxon Mobil Corporation and Rio Tinto.
Since its formation in 2000, Cutfield Freeman & Co has advised on over 70 transactions globally, including project financing, joint ventures and M&As.
Cutfield Freeman & Co will develop a financing plan and assist with fundraising, as well as in reaching agreements with potential offtakers for SCONI’s scandium, cobalt and nickel production, and with potential strategic partners.
The initial term of the appointment is four months, which is expected to be extended to match the feasibility, development and financing duration of SCONI.
Milestones to production
In July this year, Metallica produced what is believed to be Australia’s first ever batch of high purity scandium oxide from its Brisbane pilot plant in a major step towards the development of a new export industry.
In October, the company entered into a binding Heads of Agreement with US-based fuel cell manufacturer Bloom Energy for the sale of a substantial portion of the planned future production of scandium oxide from SCONI.
The SCONI project hosts a current resource of 5,741 tonnes of scandium oxide, 467,000 tonnes of nickel and 50,000 tonnes of cobalt.
Metallica has also signed a memorandum of understanding for a strategic alliance with master alloy producer KBM Affilips.
KBM Affilips will assist Metallica by helping to develop relationships with key aerospace and component manufacturing companies, and assist in procuring funding for ongoing feasibility studies and project development for SCONI.
A Scoping Study on the SCONI project indicates it would have a net present value of $870 million, an average annual operating margin of A$213 million, and an internal rate of return of 23.1%.
Shareholders also have high hopes for SCONI with Metallica receiving firm commitments for a A$3.3 million placement earlier this month.
The company will place just over 13 million shares at $0.25 each with existing shareholders, including Jien Mining which took its pro-rata share to maintain its holding of about 19%, to raise $3.25 million of the funds.
A further 250,000 shares for gross proceeds of $62,500 will be issued to the directors of Metallica, subject to shareholder approval at a general meeting.
Worth noting is Metallica had $23.9 million in cash and investments as of 12 November 2012, equating to cash and investments per share of $0.18, compared to the current share price of $0.23.
A further A$2.65 million tax refund under the Federal Government’s Research and Development Tax Incentive program for expenditure in relation to the development of SCONI further increases its cash reserves.
Proactive Investors is a market leader in the investment news space, providing ASX “Small and Mid-cap” company news, research reports, StockTube videos and One2One Investor Forums.