Australian Mines Ltd, a very junior gold and base metals explorer, is about to become the largest producer of scandium, a rare metal key to making better alloys for cars and planes.
A short time ago, its shares were 27% higher at $0.014. Before the announcement the company had a market capitalisation of just $12 million.
The Perth-based company today announced two deals: the 100% acquisition of the Flemington Scandium-Cobalt Project in NSW, one of the highest grade scandium deposits in the world; and up to 75% interest in the Sconi Scandium-Cobalt Project in Queensland, Australia’s largest, and one of the most advanced, scandium mining projects.
“Australian Mines plans to become the world’s largest scandium supplier producing from a primary deposit, resulting in cost-effective and reliable production,” says managing director Benjamin Bell.
The company will pay about $6 million, plus a 1.5% gross sales royalty, to Jervois Mining for the Flemington Project.
For the joint venture interest in the Sconi Scandium-Cobalt Project, the company will pay Metallica Minerals $250,000 to start and then either complete a feasibility study for a mine within four years or spend $10 million on the project in the same time.
The get to a 75% holding, Australian Mines Ltd would then need to put together funding for the project going no later than 18 months after the feasibility study.
The company says a mining operation at Sconi has the potential to become the world’s major dependable source of the
Australian Mines says demand for scandium is forecast to grow by at least 800% over the next 10 years.
“Australian Mines sees a huge future for scandium as a product, with the largest growth market likely to be the automotive manufacturing sector,” says Bell.
Aluminium-scandium alloys are already used by some global car manufacturers, reducing the weight of an average family car by up to 200 kilograms and SUV’s by up to 400 kilograms.
“We see this trend of car makers transitioning from steel to aluminium alloys continuing, with potential application of aluminium-scandium alloys in structural components including doors and chassis parts,” Bell says.
Cobalt, a critical material used in making lithium-ion batteries for electric cars and for storing solar power, will be a by-product of the scandium mines at Flemington and Sconi.
Australian Mines’ plans to develop the Sconi Scandium-Cobalt Project to generate revenue in 2020 and bring the Flemington Scandium-Cobalt Project to production by 2022.
The impact of scandium on the automotive industry, according to Australian Mines: