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MZI increased revenue from mineral sands sales in the March quarter by 11 times to $6.3 million. Sales began in December.
Production of heavy mineral concentrate has continued to increase into the June quarter through plant improvements.
Recoveries in May have improved to 90% of design, a strong improvement on the March quarter average of 70% of design.
Keysbrook will be the world's biggest primary producer of Leucoxene, a titanium bearing mineral.
Trevor Matthews, managing director commented:
"With L88 sales about to commence, we look forward to again reporting significantly improved production and sales revenue for the current quarter."
Product sales have been primarily in zircon and L70, with L88 to commence shipping in the June quarter. L70 and L88 are grades of Leucoxene.
Gross operating costs were $414 per tonne during the March quarter compared to the average sale price of circa $553 per tonne.
This operating margin has strong potential to increase as production at Keysbrook ramps up to achieve design production rates.
The maiden shipment of 6,825 tonnes of L70 was completed in March 2016.
Smaller frequent shipments of zircon concentrate, which commenced in late December 2015 and have continued on a regular basis, now exceed 6,400 tonnes.
Recent resource upgrade
Recently, MZI close to trebled its ore reserves at Keysbrook, 70 kilometres south of Perth.
A new ore reserve points to 15+ year mine life at Keysbrook, after increasing 277% to 72 million tonnes at 2.2% heavy minerals.
The Ore Reserve footprint covers less than 50% of Keysbrook resources, leaving potential for further expansion.
Keysbrook has the potential for a life of mine of over 30 years at the initial planned production rate.
Off-take agreements are in place for 73% of 2016 production under five year sale agreements with blue chip companies, Chemours and Tricoastal/Wensheng.
Heavy minerals market
Demand for titanium dioxide feedstock is showing early signs of improving demand, which bodes well for prices in the medium term.
The global 3D printing industry is forecast to grow to over $20 billion by 2020, which has potential game-changing flow through effects to titanium demand.
Premium grades of zircon sell for US$950 per tonne with demand growing in line with global GDP.
The market for premium mineral sands products remains relatively stable compared with other commodities with modest mid-term price growth forecast.
Continued improvements to production and the first shipment of L88 bodes well for strong June quarter sales figures, with recoveries during May at 90% of design.
MZI is covered by three brokers being Argonaut, Bell Potter and Patersons Securities. All brokers have a Buy rating on the stock and price targets ranging from $0.48 to $0.70 per share.
With the stock currently trading at $0.25 per share, this represents an upside of up to 180% to the broker price targets.
The Keysbrook project represents the largest, single-project leucoxene producer in the world.
Keysbrook project construction completed and commissioning commenced on budget and ahead of schedule.
MZI is a globally competitive low cost heavy mineral sands producer with the majority of expected production committed under long term contracts.
The company is in discussions with multiple parties for uncommitted volumes.
Keysbrook is a long life asset with significant potential for expansion.
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