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Main ForumATR : 1 Billion tons of Zircon More cash than mkt cap

  • Astron Resources (ASX: ATR) is well positioned to take advantage of the looming shortage of Zircon caused by a ~47% increase in world demand that is mainly due to China.

    ATR has a large amount of cash that exceeds its market cap. It also makes money so is cash flow positive.

    It seems that ATR is almost the definitive study of an unloved elephant.

    To put ATR into perspective:

    • ATR have the second largest deposit of heavy mineral sands and of zircon of all our ASX listed companies.
    • Their giant Donald deposit is near Horsham, Victoria with major infrastructure only kilometers away
    • They have $166.5m in cash and a market cap of $149m.
    • They have a long term business in China.
    • They have completed the structure of the Yinkou factory in China



    atr-resource.gif
    Click for larger image

    atr-zircon.gif

    Uses of Zircon Looming shortage
    Other ASX listed companies with an interest in Zircon


    I hold ATR

  • Hi Sparty, Do you know when ATR will start shipping their mineral sands? Also, I don't understand why ATR sold their zirconium chemical operations in China to Imerys only to be building a new operation to produce advanced zirconium, titanium metals and chemicals. Do you know if the reason was that the old plant was not up to their future plans? Cheers Alite

  • Hi Alite I rang and had a general chat with their company secretary several weeks ago... he said to ring him back if I had further questions. I did read something about the older plant... But I do think that you have hit the nail on the head. From their website it does appear that they are moving towards the cutting edge of Zirconium and Titanium specialized products and it makes sense for them to do that in China where the greatest off-take will be. They have now got their mining license and have completed their plans of the mine and associated processes. But I don't know when they are going to actually start.

    I have asked for an analysis of ATR from my WilsonHTM adviser, he agrees that it is very cheap and is looking to see if there is a problem lurking. One thing I think that I spotted was that ATR used to pay a dividend but now don't. The distribution of their shares is interesting.....

    I will ring them again this week - Thurs / Frid to ask your questions and a couple of my own. One burning question for me is that as Zircon and Yttrium are found together at times (Alkane Resources" DZP project) have they assayed their heavy mineral sands for REEs.

  • Hi Sparty, It is highly unusual that a company does not give an estimated start date. I could not find it anywhere in their reports. Thanks for taking this question to their secretary.

    ATR may not be giving a dividend but they were engaged in a share buyback until May 2010 (completing 1.2 mill of their possible 5.5 mill shares to buy back) which has a similar effect as giving a dividend to shareholders. Though the magnitude of their giving money back is harder to quantify. Could you ask if they are going to continue with the buyback? - I assume not as they'll need the money to set up their new plant.

    Here are a few more questions: What did ATR have to give up to get funding from Posco? Is it is a share in the project then what % Do they think that they will need more money than they have in the bank to complete the plant? What is the capex? Have they carried out a Bank feasibility study? If so, could we see it? What price have they assumed they will get from their cutting edge products? What are their assumed costs? What $Au to $US ratio have they used?

    As you say, it would be good to know if they have other valuable metals in their sands. Happy Trading Alite

  • China has now declared Zirconium as a strategic metal.

    Here is why: From Metal Pages...

    BEIJING (Metal-Pages) 01-Dec-2010. China's nuclear industry will be vulnerable unless the government starts purchasing and stockpiling nuclear grade zirconium and offers support to domestic producers, China’s zirconium industry players warn.

    If China fails to build up strategic stockpiles and support domestic zirconium producers through measures such as reduced taxation, the country risks having to rely excessively on imports, which would have serious consequences for its nuclear sector.

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