RE: MKA NSDQ Requirements8 Jan 2025 10:28
Rider.
Rare earth prices are depressed at moment. You can read on it and primary producers are struggling a little.
The key thing here is the recycling business. Read the dfs. They think even at current prices 50ish the recycling has costs of 20usd. As such it is profitable, probably more profitable than mine supply. Demand is expected to increase due to green transition, robots. China dominates primary mining but more importantly separation and making magnets ( used from ev, wind power and defense applications..widespread). Governments are marking the minerals as critical and as such many critical mineral associations are popping up. Read up on critical minerals association we are a key project they say.
We own 80pct of recycling outside of usa, starting commercial production in uk and Germany this year.
In usa we have 40pct. The dfs is from our American partners and gives an npv of 260m usd at current prices and 500m at forecast.
Importantly we do not have to pay our 40pct of the 125m costs upfront. Our partners fund it and we repay it. This limits dilution.
The key idea here is
1. Governments are trying to solve the rare earth shortages and we are a supported project by critical minerals association. We hope for grants etc
2. There is a chance trump will tarrif rare earths as part of a global tarrif on China or in limited scope tarrifs ( query Washington Post and tarrifs for few days ago). If he does our domestic usa production will get a good price as 90pct of rare earths come from China as imports, and clearly we would increase our price to effect the tarriff.
3. The kicker today is we are trying to get value from a mine with a dfs complete. There are not many projects at dfs stage. Do not be fooled by the 500m usd plus npv, that was from a time when RRE was high. The rational view is even if we get a little cash from sale, it limits dilution in recycling business, and if we get grants and gov support we could scale in uk and Europe
4. We are using JV to make plants in other countries. Already discussing Japan, with company saying more to come.
That is about it. Watch some investor presentations. You can also Google cotec holdings who run the usa operations, the latest one discusses the dfs.
Again this is a pre revenue play for a tech just going into commercialisation. If the tech works per the study it has a good runway.
The issues
1..we have little cash
2. We have not yet commercialised/ have offtakes
So there is risk
The upside
1. If trump goes nuts on tarrifs our sale price increases
2. China uses rare earths to fight back against usa restrictions. See antimony etc ( you know this). If they suggest limiting exports of what we produce our offering becomes strategic.
3. Worst case trump does nothing, maybe we get some cash from sale. This limits dilution in recycling operation and we have a shot at giving a recycling tech ago.
Nothing is certain but the market price/demand for our non usa sup
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