RE: Not Bad6 May 2026 16:12
Paul,
Probably worth also posting here what was posted on the telegram group as regards the conservative approach taken in the Hannam and Partners note as shown below: 👇
Note in the breakdown of the valuation , Hannam and Partners have only used 15% of the ore body at the Head prospect (due to the early stage of exploration) within their DCF model:
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Valuation
The Boland Project is a pre-resource asset, as such we have built a conceptual DCF model based on how we expect the project to be developed through the MRE due in Q2’26 and ahead of the scoping study in Q3’26. Overall, the initial resource at Boland will likely be split between two of the more developed targets, Boland and Head, with both demonstrating recovery from ore to MREC. However, the Boland target is more advanced with ISR testing to a more complete level compared to the Head target. The Boland target covers an area of 16km2, with drilling to date implying an expected ore body thickness of 0.9m with a TREO grade of 2,140ppm. Assuming a density of 1.7t/m3, this implies a resource of 24.5Mt. The Head target is much larger at 85km2, with an ore body thickness at up to 8m. Due to the earlier exploration stage for Head, we assume this thickness is confirmed across 15% of the orebody, generating 173.4Mt in ore grading 1,095ppm. Overall, this would deliver a total resource of 198Mt at 1,224ppm TREO, which we have provisionally used as the life-of-mine mineral inventory within our DCF for the project.
We assume the Boland project can support a 10Mtpa operation with a 20 year mine life, with the capital cost of Head being funded by Boland cash flows. To derive a provisional estimate of capital costs, we have looked at conventional rare earth mining projects with technical reports released since January 2020. We then take the capital intensity of these projects as the capital cost divided by annual rare earth production. Using the projects outlined below, this generates a capital intensity of US$99,762/t of annual production which would imply a capital cost of US$423m. However, we note that ISR operations in the uranium sector have capital intensities that are just 10%-15% of those of conventional mining operations. We take a conservative estimate at this stage at 20%, above the upper end of this range, which implies a potential capital cost for Boland of US$84.7m which we assume is spent in 2029. We note the most expensive capital requirement in ISR uranium is Ion Exchange (“IX”) columns, which are not required in Cobra’s flowsheet.
While this provisional capex estimate is subject to a high degree of uncertainty, we note that Brazilian Critical Minerals’ Ema Rare Earths project which is also ISR has a capital cost of US$55m with annual production capacity of 5,314t. Applying the same capital intensity to Boland would imply a capital cost of only US$44m, significantly lower than our modelled expenditure.
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