Member Info for SussexEngineer

LB,

Remember our product is concentrate not refined oxide. If the Chinese reduce refined output who do we sell to? There is only 1 non Chinese refiner and they have their supply chain established. It will take a few years for alternative refiners to be built (UK, USA x2) in the meantime the price for concentrates will reduce. What we want is the Chinese to increase their output, increase the demand for third party concentrate until alternative refiners appear. This is apparently happening if you read the board over the last week.

Can anyone explain why the carbonate concentration plant would be built in South Africa, when the mine material they are processing is some 2,500km away? It means transporting the ore and the waste vast distances. either through the river and lakes and onto railways/roads in Zambia or across Tanzania, to Dar es Salaam and onto ships to South Africa. There is no mention of the plant coupling into the Sasol based process or being modified to handle the Phalaborwa phosphate spoil pile. There is more to this than the RNS is informing us. It could be that they have some initial processing in Gakara or they will ear mark the high concentration seams of rare earths for the journey to SA and leave the existing Gakara processing to meet the TK contract.

Yes South Africa has better infrastructure, skilled workers and geopolitically it offers less threats but someone out there must have a better appreciation of this than me, so please enlighten.

This should be good, in the short term, for RBW. They are part of the supply chain and a reduction or restriction in refining capacity would affect concentrate prices, as the supply chain is squeezed. It is all about supply and demand.

Remember that China does not have sufficient RE mining capacity already and hence them importing from Myanmar (Burma) and for us TK.

This should buy time and maintain concentrate prices until alternative refining capacity comes on stream.

DW,

Timing.
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Remember the Chinese drove the only western RE supplier, MP, into bankruptcy. Demand in those days is not what it is now. Ask yourself who was buying electric cars? Apart from the Danes, who was building windfarms/turbines and who truly believed in climate change? The world has changed. The Chinese producers are struggling to meet their own internal market. Western governments saw how the Chinese treated Japan, from an incident in the South China Sea. There is a dash for supply. Look at the demand curves up to 2030.

RMac,

I can't see the SA authorities not giving permission. The material that will be handled has already been mined and processed. It is on the surface. Clearly they will have concerns about dust, emissions and process waste but as long as RBW does a professional job of fitting abatement and treatment facilities, there is no rational I can think this will not get approval. SA have still extensive mining, including coal mining and processing operations, so have experience in the sector. South Africa has significant unemployment and finance issues that I can see this going ahead.

Monarch,
It is one thing to get a pilot plant back up and running, after I am guessing it has been idle for possibly 15 years. Sasol sold the whole operation to Foskor and IDC in 2005. The USD 4 - 5m is probably to get this up and running. To build something that can produce 15kt/yr, mirroring the old Sasol pilot plant is unlikely to be less than USD 75m. If you look at the process flow diagram there is a lot of equipment. There is leaching, filtering, 5 stage solvent extraction, 6 stage stripping, mixing, precipitation and rotary calciner. They will need to have significant BoP equipment, as well as storage and probably utilities. The great and unbelievable news is that the costs to build the plant will be paid for in less 6 months. This is unheard of in most process industries. Even the most tight fisted accountant would not prevent this development.

Bardobeat, why the aggression to GK? Can you not do the maths?

I believe he is indicating a SP of about £3 per share for Phalaborwa alone. I have some doubts on the PE ratio, just based on the life of the stock levels but to be fair he has taken a conservative dilution. I would hope that RBW would use more rights issues and borrowing to fund the project. GK's logic appears sound.

There is a long way to go for Pensana to be a viable option. They have to raise the capital to build the plant, there are the planning approvals, there is the viability of the mining operation in Angola and the lower REE concentrations in that mining area. They do benefit from that railway line, to get the product to the coast.

I agree that the more refiners there are, especially outside of China, the better. We are less vulnerable to a price squeeze. The proposed Lynas refinery ,in the US, is a far more attractive proposition, to sell to. It appears to have a strong financial footing, having a viable refining operation and potentially US government support. That combined with MP, also in the US, offers additional avenues.

RBW are sitting on a viable, more than self funding, operation in Botswana and a fantastic Ex-SASOL concentration operation in South Africa.

There is a process flow diagram on the internet, if you search under images. Ignore their spelling mistakes. The gypsum is washed with water then leached with nitric acid and calcium nitrate (I would imagine this is a returned by-product stream). The material is then filtered producing a higher concentrated rare earth leachate (8 - 24g/L) before passing to a 5 stage extraction process (in series). The solvent used is Shellsol. The raffinate (impure stream) is recirculated back to the leaching process. The extract (the purer stream), from the extraction process, is then fed to the 6 stage stripping section (in series), where water is used. The rare earth content is now up to 45 - 60g/L. The liquid is then mixed with ammonia and oxalic acid, to precipitate ( solid) of rare earth Oxilate. This solid is then fed to a rotary calciner (rotating furnace) to produce a dried rare earth mixture of about 89 - 94% purity.

I know where you are coming from, based on value, though you missed the USD 350m that Cairn have not returned plus Senegal operation bonuses.

What we all have to remember is the Indian government stole this money and this caused a lot of skilled personnel to lose their jobs, as the company had to rationalise.

Auson,

Cairn are only returning USD 250m of the USD600m of the Senegal sale, leaving USD 350m as a war chest. There is an additional USD100m performance related bonus on the Senegal sale. On the India Tax judgement read the press statements, even from the Indian media, on the likely payment to Vodafone and Cairn, as well as the position on Sanofi. All of this plus CNE can carry out a rights issue on any purchase or leverage on the savings to be made etc. They are in a great position to pick up any distressed company assets.

Cumbrian,

There is a big difference between a normal profit derived dividend and this special dividend. A normal dividend should be paid based on the operating profit of the company. The company continues to operate their assets and hopefully generates profit going forward. In CNE case they have sold a valuable asset and are giving a special dividend back to share holders, from the proceed of that sale. Rather than just paying that dividend and allowing the shares to float, the BOD are to consolidate the stock, in proportion to the dividend, making the share price neutral. This is explained in the RNS.

What you need to understand is that CNE have operating assets, designed normally to generate a profit which is used to pay for their exploration endeavours. These assets remain and are still very profitable. What you need to do is look at the market capitalisation and make a judgement does the realised Senegal sale proceeds, the Indian tax judgement (Making a judgement on the likely payment), future Senegal payments and present CNE assets outweigh the company market capitalisation. What you appear to be missing, from your statement, is the rise from 175, occurring in December, was largely the part recognition of the Indian Tax judgement of USD1.2 bn plus addons. Before I get shot down there are other assessments to make, as an asset isn't worth much if it is loss making.

I know my view and hence being invested here, but you have to make your own assessment.

That is true and you shouldn't buy the shares on the special dividend.

CNE are sitting on a sizable war chest, after the sale of the Senegal asset. Less than half is being returned to share holders. In addition there are potential income streams from the Senegal oil field performance and Indian arbitration award. This, in part, has been taken into account within the share price but certainly not all. Assets could be acquired from potentially distressed operators, certainly in the short term. It all comes down to your perceived risk and reward threshold. I just see CNE in a very stable and safe place at the moment, when we consider the economic climate. I can't say that for other oil sector companies.

Kamm,

Yes the assessed consolidation takes place after the special dividend. Look on the Cairn Energy Investor website for the Senegal RNS and the key dates and details are posted there.

Kamm,

Yes the assessed consolidation takes place after the dividend. See:

https://www.cairnenergy.com/news-media/news/2020/return-of-us-250-million-to-shareholders-following-sale-of-senegal-assets/#Tabundefined=1

Kamm,

Not too late. You have until 8/1/21 to have registered and you will be paid the 32p per share as a dividend. The share is then rationalised at the end of the month. I topped up again this morning.

What happen when the LSE stock market closed and the US rocketed to over a 10% rise? I see no RNS or news article to prompt the step change.

Good news that RBW has a viable asset, worth the USD 0.75m investment and more.

Please take the emotion out of this. Alba have a decent team and above all keep all interested parties abreast of developments.

What does everyone think the pilot plant is for? It will be to allow Alba to carry out assay results, without sending samples down to Cornwall and incurring the cost and time delays. It is not there for production, though whatever they produce will be sold. It will allow them to carefully map the hotspots and create a strategy to exploit the resource. Alba are trying to map out that geology and are giving you the information. Are we more knowledgeable now than we were a month ago? Yes, we know how many kilometres around the hillsides these vein extend. The picture is emerging, slowly but surely. When do we all believe that this mine will be producing commercial amounts? In hours, days, weeks, months? No, years, so please be patient.

Why the slide is SP? Sentiment. Plain and simple. This is a PI driven company. Forget the MMs and there are no II's at play. You can't keep drip feeding RNS's and then bypass the PI's and sell new shares, without a large number of PI's going "Why have I taken on the risk when you remove that small reward by diluting my share?". Offer your LTH an option to buy at a discounted price, if you need money. There is no dilution, the PI's have had an opportunity to gain an advantage and it tells new investors, this company looks after the core PI's.

Phantom25:
Burundi asset breaking even in Q1 2021 is perhaps a key milestone. On a more frequent basis keep an eye on rare earth metal prices such as at:

https://www.metal.com/Rare-Earth-Metals/

Please note that RBW sell concentrates not pure metals but there should be a correlation between the two, unless there is an over or under supply in the mining sector.