Argex releases feasibility study of new TiO2 project

GENIVAR Inc., one of Canada’s leading professional services and engineering firms, was mandated to establish the technical viability of a TiO2 production facility and to provide a development plan and capital estimate for the project.   The delivery of the full report in final form is expected shortly.

The financial model for the first-module was prepared by Ernst & Young (“EY”) based on information provided to them by Argex as received from GENIVAR, vendors, service providers and other third-parties in the preparation of the Study.

The financial highlights of the Study are as follows:

- Pre-tax IRR 40.1% (After-tax IRR of 33.8%)
- Pre-tax NPV of $954.4 million (After-tax NPV of $678.3 million)  (at 8% discount rate);
- Pre-tax Payback period of 4.2 years (After-tax Payback period of 4.5 years) (including an initial ramp-up period );
- Production profile of 50,000 tonnes of TiO2 annually at capacity
- Estimated life of project for purposes of the Study: 25 years

“The Valleyfield project described by the Study represents extremely positive news for Argex and its shareholders. The Study’s completion is a significant milestone on the pathway to production,” stated Roy Bonnell, the President and Chief Executive Officer of Argex. “The results as outlined in this news release make a compelling case for the economic viability of the project.”

“We believe that our ability to secure project financing, which is non-dilutive to our public equity, has been greatly enhanced because of the highly positive economics contained in this Study, the TiO2 purchase agreement we have signed with PPG industries, and our expectation that Ressources Québec Inc., a subsidiary of Investissement Québec Inc., will be an important partner as we move forward.

"Based on our discussions to date with current institutional investors, other financial institutions and potential strategic partners, we believe a significant portion of the capital costs associated with the first module can be fulfilled at the project level, thereby minimizing dilution to our Company’s equity,” commented Mr. Bonnell.

The initial industrial module will have a capacity of 50,000 tonnes per year of TiO2 pigment production. However, it is expected that additional modules will be added at the current location where they would benefit from capital investment in infrastructure already absorbed by the first module or constructed at other locations, following the successful commissioning of the first industrial module.