Titanium is usually sold as “Ferro Titanium.” One would think, at the end of the game, because of the nature of the market and because of the nature of our ore, our final product will be “Ferro Titanium.” Selling the Titanium separately from the Iron, naturally, is the other way to do it.

There’s a partial trade off. Ores combined with some Iron = more ore with less Iron left over.
But when you have more combined metal ore, the price is lower.
Removing all the Iron from Titanium = a higher price but from less ore, with more Iron left over.

I’ve taken the numbers from our 1 June 2012 NI 43-101 Magpie Press Release. I have no chemical or metallurgical or geological expertise. This is purely an exercise in mathematics.

Magpie #2 Deposit In Pit Resource at 15% FeT (Total Iron) Cut-Off (in metric tonnes)
635.2 million tonnes Indicated – Fe2O3 60.78% – TiO2 11.20% – Cr2O3 2.61% – V2O5 0.30%
293.2 million tonnes Inferred – Fe2O3 60.49% – TiO2 11.21% – Cr2O3 2.54% – V2O5 0.32%

433.75 million tonnes = Our share from our 46.72% ownership of Combined Indicated and Inferred
Fe2O3 60.69% – TiO2 11.20% – Cr2O3 2.59% – V2O5 0.31%

Million metric tonnes = 263.24 = Fe2O3 ($141.10 CAD metric tonne 31 May 2012)
Million metric tonnes = 260.73 = Fe2O3 after deduction for Ferro Chrome and Ferro Vanadium
Million metric tonnes = 251.01 = Fe2O3 after additional deduction for Ferro Titanium

Million metric tonnes = 48.58 = TiO2 ($15,100 CAD metric tonne 1 June 2012)
Million metric tonnes = 64.77 = Ferro Titanium ($7,600.50 CAD metric tonne 2 July 2012)

Million metric tonnes = 11.23 = Cr2O3
Million metric tonnes = 14.97 = Ferro Chrome ($2,786.53 CAD metric tonne 2 July 2012)

Million metric tonnes = 1.34 = V2O5
Million metric tonnes = 1.79 = Ferro Vanadium ($25,580 CAD metric tonne 2 July 2012)

Scenario #1 = Sell Titanium as Ti02

$36,789,003,000 (260.73 million metric tonnes x $141.10 market price) = Fe2O3
$733,558,000,000 (48.58 million metric tonnes x $15,100 market price) = TiO2
$41,714,354,100 (14.97 million metric tonnes x $2,786.53 market price) = Ferro Chrome
$45,788,200,000 (1.79 million metric tonnes x $25,580 market price) = Ferro Vanadium

Total = $857,849,557,100 Market Price

1% of Market Price = $78.41 per share ($8,578,495,571 / 109,405,620 shares outstanding)
1.5% of Market Price = $117.62 per share ($12,867,743,357 / 109,405,620 shares outstanding)
2% of Market Price = $156.82 per share ($17,156,991,142 / 109,405,620 shares outstanding)
2.5% of Market Price = $196.03 per share ($21,446,238,928 / 109,405,620 shares outstanding)
3% of Market Price = $235.23 per share ($25,735,486,713 / 109,405,620 shares outstanding)

Scenario #2 = Sell Titanium as Ferro Titanium

There is an acceptable range of percentages for the components of Ferro Titanium.
I’m using middle-of-the road 75% TiO2 and 15% Fe2O3.

$35,417,511,000 (251.01 million metric tonnes x $141.10 market price) = Fe2O3
$492,284,385,000 (64.77 million metric tonnes x $7,600.50 market price) = Ferro Titanium
$41,714,354,100 (14.97 million metric tonnes x $2,786.53 market price) = Ferro Chrome
$45,788,200,000 (1.79 million metric tonnes x $25,580 market price) = Ferro Vanadium

Total = $615,204,450,100 Market Price

1% of Market Price = $56.23 per share ($6,152,044,501 / 109,405,620 shares outstanding)
1.5% of Market Price = $84.35 per share ($9,228,066,752 / 109,405,620 shares outstanding)
2% of Market Price = $112.46 per share ($12,304,089,002 / 109,405,620 shares outstanding)
2.5% of Market Price = $140.58 per share ($15,380,111,253 / 109,405,620 shares outstanding)
3% of Market Price = $168.69 per share ($18,456,133,503 / 109,405,620 shares outstanding)