TSX-V- and Aim-listed rare earths developer Mkango Resources has started with an extensive hand-auger drilling and soil sampling programme to identify rutile prospects within its 869 km2 Mchinji licence, in Malawi.
The programme follows up on reconnaissance work, which resulted in the discovery of rutile during a shallow soil sampling and auger programme that the company completed in September.
However, the initial exploration work was limited by equipment availability in Malawi owing to restrictions posed by the Covid-19 pandemic, but Mkango was nonetheless encouraged by a single 8.9 m auger hole that returned titanium dioxide grades of between 3.17% and 4.09%, as well as between 4.1% and 9% total heavy minerals.
The early-stage results showed geological similarities with saprolite-hosted rutile mineralisation that was discovered on the adjacent Sovereign Metals licence, to the east of the Mchinji licence area.
Mkango chief geologist Dr Paul Armitage says this new drilling and soil sampling programme will help the company target saprolite-hosted mineralisation and test the extent of the rutile and ilmenite mineralisation over a large part of the licence area.
“Given that rutile is in high demand and that there is a shortage of supply, confirmation of rutile prospects on the licence could prove to be highly significant for the company,” he adds.
The drill programme will be funded from Mkango’s existing working capital.
Meanwhile, the company continues work on a feasibility study for the Songwe Hill rare earths project, in Malawi.
Rutile, anatase and ilmenite are naturally occurring titanium dioxide minerals, whose main uses are 90% for pigments, 5% production of titanium metal and 5% welding.
Rutile is the purest, highest-grade natural form of titanium dioxide and is the preferred feedstock in manufacturing titanium pigment and producing titanium metal.
Finely powdered rutile is a brilliant white pigment and is used in paints, plastics, paper, foods and other applications that call for a bright white colour. It has also been widely used in the production of glass, porcelain and ceramics, as it is a valuable colouring agent. It can also be used to add colour to steels and copper alloys.
Titanium also has specialty uses including in welding, aerospace and military applications.
ASX-listed Iluka Resources has stated that, when compared with current deposits and operations, the industry is facing declining grades and assemblages – the relative weightings of each mineral – for future deposits being developed.
Sierra Rutile, in Sierra Leone, owned by Iluka, is the only high-grade, large-scale operating primary-source natural rutile mine in the world.
Armitage believes the rutile market fundamentals are robust with current and forecast pricing remaining strong.
Iluka, in its results for the third quarter, declared a weighted average received price for rutile of $1 225/t in the year to date, an increase of 7.3% over the full-year 2019 price.
As at October 29, the price was $1 345/t.
Mkango president Alex Lemon says the natural rutile market has been in structural deficit for a couple of years now. This has seen a steady increase in price over the past two to three years, but perhaps not the spike one might expect in other commodities, as end-users - the pigment producer sectors dominates demand - can also use synthetic rutile that is manufactured from naturally-occurring ilmenite.
Therefore, the rutile market is somewhat influenced by what is going on in the ilmenite market, which Lemon believes is not so tight.
"The pandemic has obviously impacted pigment markets, and therefore demand and pricing of natural rutile. Looking at Iluka’s reported numbers, demand was solid in in the first quarter before falling sharply in the following quarter as lockdown restrictions bit. Illuka reported some recovery in pigment demand in the third quarter, particularly in the large Chinese market where demand has reportedly returned to pre-pandemic levels.
"Natural rutile pricing has been relatively steady through the year despite this volatility in the dominant end-use market, partly I suspect because supply was also curbed during the height of global lockdowns, but also no doubt because of the backdrop of a longer-term structural deficit."
Lemon states that, looking further out, one would imagine the pricing outlook to be positive given the aforementioned structural deficit, though the availability of synthetic rutile, which is more costly to produce than primary natural supply, could perhaps place some form of ceiling on price growth.
"And therein lies the opportunity if a new low-cost and large-scale source of natural rutile can be discovered, which would be more cost-competitive than manufacturing synthetic rutile. It is obviously not quite as binary as that, as the synthetic rutile market is dependent to a large degree on what is happening in the wider ilmenite market," he concludes.