It's a not too complicated hypothetical situation vwboy. You just need a view, boy.
Taking Mt Weld alone for $100m, you get a premier ROW LREE asset with cost and metallurgical issues. It is permitted, drilled, stripped and developed with infrastructure +- a mothballed plant. It is located in a top tier jurisdiction. You also get all of LYC's lessons.
For $2 - $3m per year (i.e. holding costs of 2-3% on your bet) you have care and maintenance of the asset and a metallurgical research program to overcome the problems discovered at LAMP.
Either or both of two things can happen in the future. 1. REE's become more valuable. 2. There is a metallurgical and/or processing break through. Given the history of metal prices and mineral processing throughout global development, the chances of either of those things occurring is very high. At that point Mt Weld may be worth whatever, say $500m. So for $100m and a 3% holding cost, you get a potential 5x return. The downside in risk is limited by whoever does the same sums at a lower purchase cost of the asset.
LYC Price at posting:
18.0¢ Sentiment: Sell Disclosure: Held
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