PROJECT UPDATE: Argex Releases Feasibility Study for TiO2 Industrial Project

Argex Titanium (TSX:RGX), whose main goal is to achieve production of titanium dioxide (TiO2), iron and vanadium pentoxide as soon as possible, took a step closer to that objective this morning with the release of positive results from the feasibility study for its TiO2 industrial project.

The company notes in its press release that the study is based on a first-module production facility, to be located in Salaberry-de-Valleyfield, Quebec, that will produce 50,000 tonnes per year for an estimated 25 years. The study shows a pre-tax internal rate of return of 40.1 percent and a pre-tax net present value of $954.4 million at an 8-percent discount rate. The pre-tax payback period comes in at 4.2 years, including an initial ramp-up period.

The facility will mainly produce coated and uncoated TiO2 pigment, which is typically used for architectural paint, plastic and cosmetics applications, as per Argex. Commercial by-products “of significant value” will also be produced when feedstock is processed, meaning that waste treatment and disposal costs will be reduced — that production process, according to Deborah Bascal of Proactive Investors USA & Canada, has recently led Argex to become “the envy of its peers.”

Following the successful commissioning of the first module, additional modules are expected to be added at the same location. Roy Bonnell, president and CEO of Argex, commented that “[t]he financing of subsequent modules should benefit from better financing terms results from the cash-flow and reduced risks associated from the operation of the first module.”

“Work related to detailed engineering should start in early 2014 and permitting is already underway,” said Enrico Di Cesare, Argex’s chief operating officer and vice president, technology.

Argex rose 5.62 percent on today’s news and is currently trading at $0.94 per share.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.