Latin America Reports

White Mountain invests in Chilean TiO2 pilot production facility

By Charles W. Thurston | January 8, 2009

Canada's White Mountain looks to Chile to stimulate growth in the down economy.

Vancouver's White Mountain Titanium Co. is banking on a recovery in the world titanium dioxide market, with expectations that its pilot project in northern Chile-the country's first-will blossom into an estimated $280 million production facility, online as soon as late 2010 to produce 100,000 metric tons of rutile concentrate per year. The company has already invested approximately $10 million in the project, which is located in the Cerro Blanco reserve, in Chile's III Region, and expected to ultimately serve the U.S. market.

With the pilot project results expected by the end of 2008, the company hopes to complete its bankable feasibility study by mid-2009, based on the production of as much as 200,000 metric tons of premium grade rutile TiO2 concentrate-bearing 94.5%-per year. In the following year, the company hopes to sign production purchase agreements with customers.

To help pay for the build-out, White Mountain in October sold $2.1 million worth of shares in a private placement at $0.75 per share; the company stock has slipped to $0.40 to $0.50 per share since then.

The ore processing would include a high intensity magnetic separation with process water sourced from a desalination plant constructed at the port of Huasco, according to the company's third-quarter 2008 10Q filing. Subcontractor AMEC-Cade assumed that mining would be done under contract at a cost of $1.20 per metric ton mined and that the price of high-grade rutile concentrates would be $500 per metric ton FOB port, according to the report.

AMEC-Cade is the lead contractor for the early stage development work. Among other contractors in the Cerro Blanco project are Centro de Investigacion Minera y Metalurgica Tecnologia y Servicios (CIMM) and Cytec Chile Ltda, which are performing process development and design work. The company's 10Q indicates that it holds 33 registered mining exploitation concessions and five mining exploration concessions in the process of being constituted, over approximately 8,225 hectares located approximately 39 kilometers west of the City of Vallenar.

Global prices for TiO2 have been tight, with DuPont raising its price for sales into Latin America by $150 per ton in late September. While the U.S. market for TiO2 was $2.2 billion in 2007, it was expected to drop by at least ten percent in 2008. But signs that the market has slowed more substantially may be seen in a missed $16.6 million payment in December by Tronox Worldwide on a $350 million debt issue. In earlier review of Tronox, credit rating agency Fitch indicated that the TiO2 market was moving with the general economy, and that projections for the growth in TiO2 demand are modest.

White Mountain indicates that its current Chilean reserves will last 20 years. Co-production of such materials as sodium and potassium feldspar, which are consumed by the ceramics and glass industries, is also under study. Feldspar production has been estimated at as much as 600,000 metric tons per year. Should the Cerro Blanco project pan out, White Mountain is considering three other reserves areas in the country.