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Skid, I wouldn't blame David Robb solely for the collapse in prices in 2012. Let's remember that just about every producer and miller had their nose in the trough at that time, and you had TZMI saying there was no substitute for zircon and forecasting a 2013 'Base Case" for zircon of US$3,500/tn (and a 'High Case' of US$ 4,200/tn !!!).

Coming back to the present time and I agree the market is a little more balanced than felt previously. This in part is helped by ILU selling 30kt from stock in H1. They'll do the same in H2, but its not sustainable beyond next year. China also seems to be going through a correction at the moment, and with the market now believing that price will stabilise around $1,600/tn it has brought an end to speculative buying that was magnifying the tightness in the market.

With the strong USD at the moment, Australian producers don't have to be aggressive on price. Today's US$1,600/tn equates to A$2,2250/tn @ 0.71c Fx, or in 2011/12 terms the equivalent of US$ 2,330 when the Fx was 1.035. You can do the math for the Rand and get something similar. Nevertheless, there seems to be an industry consensus that we'll see prices of US$1,800 by the end of 2019, and $2,000.tn in 2020.

The CMD is a positive step, but there is so much more they could be doing. At last week's Zircon Industry Association conference, Iluka, Sheffield, Strandline, Image and Kalbara all gave presentations to update their activities. Where was Kenmare ?

Hot of the press from today's Zircon Industry Association conference :

Iluka : https://www.asx.com.au/asxpdf/20180906/pdf/43y3nx50qnzn7d.pdf

Sheffield : https://www.asx.com.au/asxpdf/20180906/pdf/43y3fxwgkgl84d.pdf

BF, Base's $155 was the full year avg (Jul'17 to Jun'18) while KMR's average price looks like it was about $168 (from the H2 results presentation).

Supaman, while everyone keeps banging on about KMR's $100m EBITDA, remember this is still the lowest in the industry.
- KMR's H1 EBITDA of US$47m equated to 34% of sales revenue,
- ILU's H1 EBITDA of A$249m was equivalent to 41% of revenue,
- BSE's FY EBITDA of A$109.3m was equivalent to 55% of revenue.

$100m is a huge improvement from where they were, but is still a pretty ordinary return for a$1Bn asset. They should be somewhere north of $150m EBITDA to attract new investment away from other Mins Sands producers and projects.

New development approvals coming think and fast. Strandline get approval for their mining licence in Tanzania.

http://www.strandline.com.au/irm/PDF/2625_0/FungoniMiningLicenceApproved

"The grant of the Mining Licence is a major milestone allowing Strandline to finalise development plans,
including completion of funding and pre-construction activities. Nominal 12-month design, construction and commissioning period and 2.7 year payback period from start of construction"

Although not a significant project in its own right (~17kr pa ilmeite / 7kt pa zircon), the experience and cashflow will assist Strandline in developing the much larger Coburn project in Australia.

Interesting presentation from Base on their '17/'18 financial result.

http://www.baseresources.com.au/wp-content/files/180827_BSE_ASX_Full_Year_2018_Investor_Presentation.pdf

Ilmenite prices for the period only average US$155/tn (Slide 12) ?

Toliara Sands (40kt zircon / 500kt of ilmenite) planned to in production by Q4, 2021 (seems optimistic).

Sheffield have won their Native Title Tribunal ruling that paves the way for them to obtain their mining lease for the Thunderbird project in They still need to secure ~$150m in funding, but appear now to be on track to producing 50kt of zircon and 500kt of ilmenite by 2020.

https://thewest.com.au/business/mining/sheffield-jumps-on-native-title-win-ng-b88942700z

I read the article earlier in the week from another source and thought Vergnano was incredibly ignorant, incredibly arrogant or both. Like many American he seems to have his head up his @rse with no real understanding of what's going on in China.

“Today we are back into balance. China has shut down a lot of inefficient capacity, and I don’t see any reason China would re-enter with a lot of capacity,” said Vergnano.

While companies in China are still building some sulphate-based TiO2 plants on a smaller scale in the range of 60,000 tonnes/year versus world-scale chloride-based plants at 100,000-200,000 tonnes/year, the plants that have been shut down are not coming back, he noted."

He seems to totally overlook the fact Billions have committed to a 200 000 tonnes pa expansion, a lot of it in chloride. There are several other new projects underway, including a 100kt pa sulphate project due to start production in H2 2018 and a 60kt pa chloride project due to be finished in early 2019.

From KMR's point of view, we need the Chinese to continue building new plants in order to absorb the extra ilmenite coming from zircon incentivised new mines.

If there is so much takeover interest in KMR, where were all the alternative bids in 2016 to trump ILU's "opportunistic low ball offer". Surely the time for any interested party was back then, not today ? If no one came out of the woodwork then, I can't see anyone wanting to pay double today what they could have bought it for then.

Yes Greeno, ILU increased their 'Reference Price' by $170/tn to $1,580/tn, fixed for 6 months. Others though are $1,600 - $1,650/tn, so they're still going softly and following rather than leading the market as they've done in the past.

There's been a big sell off of min sands stocks on the ASX in the last two weeks over fear of a China slow down and falling commodity prices :
- ILU down from $11.60 to $9.60 (-17%).
- BSE also down from $0.30 to $0.25 (-17%).
- MRC being hammered, down from $0.25 to $0.18 (-28%)

Interesting to see that the lack of liquidity (or whatever other reason you are to believe) that has prevented any appreciation in KMR's share price has also protected against the significant falls that's hit its peers. Had KMR followed the same trend, we'd potentially be looking at a price below £2.00.

Contango, the process of new mine development is already well underway. Image (Boonanarring), Iluka (Cataby) and Sheffield (Thunderbird) will add ~650kt pa of ilmenite over 2019 - 20. Several other projects are also well advanced, being driven by rising zircon prices.

Lets also remember TZMI like a bet each way. Hence, the reports I've seen show a potential deficit of 600kt by 2020 if there no new supply.....but they also also forecast a potential surplus of 720kt with new supply. The likely answer will be somewhere in between, probably in all likelihood a balanced market. Which is why their ilmenite price forecast is more or less flat.

Hopefully TZMI are wrong, and I'm wrong too. But the TZMI picture goes some way to explaining the share price this year if the investment community are relying on TZMI data for their decision making.

The funny thing is, TZMI have been consistently wrong over the last decade, being overly optimistic at the top of the cycle (a long term zircon price of $2,500/tn in 2012), and overly pessimistic at the bottom of the cycle (as recently as Q3, 2016 their zircon forecast for 2018 was just $900/tn).

Most of the media just follow what TZMI feed them, and the analysts aren't much better. Meanwhile, the miners just talk their own book and frankly have about as much clue as everyone else as to what will happen in 2 - 3 years time. It is an industry that has always been characterised by significant uncertainty.

While we can agree the TiO2 market is tight, its a concern if KMR can't make enough money at the top of the cycle to pay a return to shareholders. No wonder the share price sits where it sits.

Similarly ILU's policy was (is ?) to pay~40% of free cashflow as dividends.

If KMR's gross earnings are +/- $100m this year, how might that translate to a dividend ?

I applied the BSE selling prices below with KMR's H1 sales volumes and came up with an average sales price for KMR of $233/tn under scenario 1 (Ilmenite of $170), and $240/tn under scenario 2 (Ilmenite of $180).

For simplicity I assumed secondary zircon was priced at 60% of primary zircon.

BSE released their quarterly today and noted an average selling price for the quarter of US$ 376/tn. Back calculating, I get :

I : 107.2kt @ US$ 170/tn
R : 25.6kt @ US$ 895/tn (vs ILU's $906/tn)
Z : 9.0kt @ US$ 1350/tn (vs ILU's $1364/tn)

Obviously it can be sliced and diced different ways, but the only way to get a higher ilmenite price is to substantially drop the zircon and rutile prices. Eg, if you prefer :

I : 107.2kt @ US$ 180/tn
R : 25.6kt @ US$ 870/tn (vs ILU's $906/tn)
Z : 9.0kt @ US$ 1305/tn (vs ILU's $1364/tn)

Base noted "Ilmenite prices decreased slightly during May but have remained stable through to the start of July. It is expected ilmenite prices will remain steady through the September quarter". I'd say something around $170-175/tn as an average for Q2 and into Q3 would be about right as an average sale price..

Positive H2 Report from Iluka :

http://www.iluka.com/docs/default-source/asx-releases/iluka-resources-june-2018-quarterly-review

Strong cashflow and a debt reduction to $34m has lead to speculation ILU could look again a KMR, BSE or SFX.

(As an aside, if KMR want to build investor confidence, they should take a look at the ILU Report. By comparison, KMR's report looks like it was written by one of MC's grandchildren)

Only in so far it will be a new competitor to KMR next year, the contract means its the potential loss of a 150,000mt pa Chinese customer to KMR and will take some of the pressure off ilmenite prices.

"Sheffield Resources is pleased to advise that it has secured a maiden binding ilmenite offtake agreement for the future sale of low temperature roast (LTR) ilmenite from its Thunderbird Mineral Sands Project (Thunderbird) in Western Australia.
.
The Agreement, signed with Bengbu Zhongheng New Materials S&T Co., Ltd (Bengbu), is based on a five year minimum annual supply of 150,000 tonnes of LTR ilmenite. This represents approximately 50% of the estimated total volume of LTR ilmenite to be produced from Stage 1 of Thunderbird."

http://www.sheffieldresources.com.au/irm/PDF/3030_0/SheffieldSignsMaidenBindingIlmeniteOfftakeAgreement

Speaking of ILU, here's their zircon presentation from the Ruidow Conference in China this week : http://iluka.com/docs/default-source/company-presentations/ruidow-zircon-presentation---english Nothing really new, other than it really highlights how zircon production from existing producers will drop off dramatically over the next 5 years (and if zircon drops off dramatically then ilmenite should do the same).