Hi Richard... Ill try to give you my view on mica based on the DD I have done so far. I would welcome hearing the results of any DD you do on your own which I am sure you will do.
Low grade mica is not in particularly low supply. The waste grades bring around .40/lb. Dry Ground mica brings a little more. Wet ground the most of the unprocessed grades. AZC will produce wet ground mica.
The grade they have is of extremely high quality from what I can tell. You can check with James Tanner at the University of North Carolina if you want more info on this. When sifted, separated, etc, higrade mica is sold to specialty industries based on their customized needs. Plastics, paint, cosmetics are just a few examples. Hi grade mica can easily sell for 15-40k per ton. Particulate size at 5 micron or less is scarce and highly desirable in a hi grade mica. Also, Aspect ratios of 50-70 are considered top of the line. This describes the surface area to thickness relationship. The market wants thin and wide, yet tiny particles. Like a liquid powder if you will.
The specialized processing methods and hi grade mica must come together for these upper quality types to manifest. From what I can gather, AZC is gonna nail the 5 micron size and go even lower. As for aspect, I am still working on definition there, but it appears they can exceed even these upper standards.
End users of mica put it in their products. End users want their products to be the best they can be. If higher grade mica will help them do this, then I would expect demand to be high. Indications are that this is the case. AZC has chosen to use the commodity pricing of about $1/lb for their rev estimate for the first year. If they sell this higrade mica for the plain old wet ground price of about $1/pound, it would be a shameful act! Ive heard their lowest quality stuff should bring 2-3 a lb. but this is not a sure thing yet.
As to the mine being new, they certainly will be producing more in the second half of the year than the first half as they will be ramping up production. Only basic logic tells me this. They have 2 years production laying on the ground already mined. No delay on that front. So I guess at an avg of only 20,000 a ton, I can see revs on say 8,000 tons which allows for ramping up production against a full capacity of 10,000 tons/yr during the second half only, at 160,000,000. I think that points to a great market for mica. If Im off by say 30% then it 100,000,000 in first year revs. At a near 100% Gross Profit due to offset of feldspar sales the mine will generate, that = pre tax earnings of 3.40 to 5.50/sh.
Whew. Hope this helps. Please feel free to add to this. I started from scratch on Mica too.
BHunt |
