Here to There - crediblity and value18 Feb 2021 15:08
We are talking Phalaborwa, this is the RBW project with the most immediate prospect of being taken to production. This project has a value so 'There' above is the much talked about valuation. An easy sum that is around $3-4bn on first estimates from the ~35mt of rare earth containing spoil (gypsum stacks) and from the 12/2 RNS: "Average in-situ combined grade of 0.15% Neodymium and Praseodymium ("NdPr") oxide". Giving a total of around 50kt of the valuable NdPrO magnet ingredient.
In the West NdPrO sells for around $100/kg: https://www.kitco.com/strategic-metals/ however RBW are not saying they will produce this magnet feedstock* but will instead produce a concentrate - TREO (Total Rare Earth Oxides). The full sentence from the 12/2 RNS:
"Average in-situ combined grade of 0.15% Neodymium and Praseodymium ("NdPr") oxide, representing 29.7% of the TREO grade reported in the rare earths basket."
RBW hope to get around 80% of the contained NdPrO value from customers ie some 0.8 x 0.297 x $100 per kg of TREO or about $24k/t. A much higher proportion than they are presently getting for TREO from their other Gakara project. Two reasons I expect: the TREO from Phalaborwa is already partly chemically 'cracked' and there is next to no Thorium.
But from 'Here' there are many hurdles to 'There', eg JORC the resource. permissions, a feasibility study, bankable business plan, financing. So what drives the sp today is not the size of this resource nor the hurdles but in reality the perception of how surmountable they are and how that is changing ahead.
The first RNS on Phalaborwa saw the sp at 4p. As the co develops the project and as in general the demand picture for Neodymium escalates in the West (TREO separation facilities are springing up, they will pay decent dollar for feedstock) the hurdles are quickly reducing to ripples along the way.
To the fag packet: ten year project at 15ky/y TREO, $5k/t OPEX, $25k/t selling price, PE 10+ gives ball park Mcap. Capex $70-100m gives anticipated ~50% dilution. Work it out.
*Mine to magnet chain is complex, see ore processing and seperation here: https://www.britannica.com/science/rare-earth-element/Processing-ores
GL.
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