* Company developing new process to extract titanium dioxide * Plant feasibility study due in the next few months * Aiming to commission first plant in mid to late 2014 By Allison Martell TORONTO, March 3 (Reuters) - The TSX Venture Exchange recently hailed Argex Titanium Inc as one of its top-performing mining issuers, but the Canadian company is in no rush to actually build a mine. Instead, Argex is preparing to construct a plant where it can produce titanium dioxide - used to make white paint, among other things - from ore produced by other companies, using its new extraction process. "Our focus is getting to cash flow as quickly as possible," said Chief Executive Roy Bonnell in an interview on the eve of the Prospectors and Developers Association of Canada convention, where hundreds of junior miners and explorers strut their stuff for investors. "We're kind of evolving towards being a specialty chemical company with what I call a hedge against raw material prices, in the fact that we could develop our own properties, if it makes economic sense." A feasibility study for Argex's first commercial-scale plant will likely be done in the next few months, Bonnell said. The company's target is to commission the plant, which would most likely be built in Quebec, in mid to late 2014. Argex touts its process, now running at a pilot plant just west of Toronto, as environmentally friendly - it says tailings could be safely used as construction material - and more flexible than conventional techniques. "We can use more sources that the other methods cannot use," said Bonnell. "It allows us to essentially source ore bodies that others reject, and (that) therefore are cheaper." To be sure, selling pigment-grade titanium dioxide would put Argex up against big players - DuPont is a major producer. But last spring, Argex won some support from another heavy hitter, paint producer PPG Industries Inc. The two companies agreed to a "technical collaboration agreement" to make Argex's pigment compatible with PPG's needs. Terms were not disclosed, but shares jumped as much as 15 percent, to what was then an all-time high. Analysts that cover Argex are positive, with Thomson Reuters I/B/E/S showing two "strong buy" ratings and one "buy" rating, and an average target price of C$2.38 ($2.32), well above Friday's closing price of C$1.28. With a market capitalization of about C$150 million, the stock has more than doubled over the last twelve months. PROJECT FINANCING Financing has become a major challenge for small mining and exploration companies, as the euphoria that lifted the sector in recent years recedes. Argex had C$6.7 million in cash and short-term investments as of Sept 30, according to its last quarterly report. It has more than enough cash to get through this stage, Bonnell said, but will need project financing to build a full plant. That could mean traditionally equity and debt financing, Bonnell said, a strategic partnership with a customer, a supplier, or another processing company, or all of the above. CAUTIOUS ON THE TROUGH In 2010, Argex completed a resource estimate on its La Blanche iron, titanium and vanadium property, on the north shore of the St. Lawrence River in Quebec. It also owns an iron ore property in the Labrador Trough of Eastern Canada. Big swings in the price of iron ore over the last six months, paired with uncertainty over how much Quebec's government will help develop the area, has jeopardized the viability of projects in the rich iron region. In February, Canadian National Railway Co hit pause on its plan to build a new rail line through the trough, a geological formation that extends south-southeast through Quebec and Labrador. While Bonnell sees long-term potential in the region, he is not rushing into anything. "Prices have come back a lot since last year," he said. "Prices aren't bad, but I think ... interest is still a little bit weak at this stage."