I can see your point. Thought this would help people to visualise what's being said.
They called this out in the SS incase people are wondering.
"When looking at the distribution of REO equivalent production over Years 0 to 11, the major revenue generating REO components are yttrium (Y, 25.4%) and neodymium (Nd, 23.2%), with other major revenue contributors being praseodymium (Pr, 5.5%), dysprosium (Dy, 3.7%) and terbium (Tb, 0.6%). The magnet metal content of the product basket (Nd, Pr, Dy, Tb) represents 33.2% of product basket."
But better to view the above with reference back to the dollar impact.
In order our revenue drivers are;
Nd (33%),
Dy (26.4%),
Tb (11.6%),
Tm (8.3%),
Pr (8.2%),
Lu (3.2%),
Gd (2.45%)
Y (2.1%)
the rest (4.4%)
View attachment 3244946Essentially, in terms of underlying impact to economics you want the highest % by value to be the ones that increase. Where IXR benefits to most is that most Rare Earth producers are heavily biased to NdPr. Which is great if that price goes bonkers they're hugely leveraged. They are both LREO.
IXR has good revenue from Dy, Tb, Tm which are HREO. Essentially the commentary around CREO and HREO is they expect these types of elements to increase in price far more significantly than the NdPr which can currently be supplied by a lot of projects.
So for example
Yb which is a HREO is only 0.5% of our revenue. If that double in value and we'd only add ~1M annually.
Dy which is also HREO is 26.4% of our revenue. If that doubles we add 57M in value.
In time I think we'll see Lu, Y, Gd increase etc but won't materially impact IXR.
The 5 key elements for pricing increase is;
Nd (33%),
Dy (26.4%),
Tb (11.6%),
Tm (8.3%),
Pr (8.2%),
By revenue that's 89%. Dy, Tb, Tm will be the elements that make this project sing over most projects targeting NdPr. If that rises then we will benefit. Others more leveraged will benefit more - but my assumption is that it's a more competitive market supplying NdPr thus I feel in terms of pricing increase the HREO elements will be the ones that go up by a larger percentage. I do however feel REO as a whole will be higher in 5-10 years - just that the HREO will go up by more.
Just to finalise the explanation of figures i've added in.
4000 is the rough annualised production profile for Makuutu at 12.5mtpa feedrate.
Producing our MREC concentrate at 92% would yield $194M USD (before payability). This is essentially the total raw value of the elements in your concentrate/carbonate.
But separator says hey, thanks, but if I'm going to separate this and sell it on I need to make a profit. This is essentially "payability" it's the discount on your basket.
For high concentrates like the ones Ionic clays produce payability is high. Makes sense ultra concentrated less work full of HREO. So the amount payable at 75% payability to IXR ~ $145M USD annually.
They separate and refine it to 99.9% purity or thereabouts and then can essentially offload it to a magnet maker at the 100% price value and separated. (or as a few separators do make their own magnets).
This has a spot price in total of $216M USD. So essentially the separator banks 71M USD from processing 4000tpa at 92% concentrate.
Downstream processing has a much larger impact to those who produce 30-45% concentrate from the mine. As the separator is doing a heap more work naturally the price receive is lower. 30% conc has 3 times less REO compared to 90%. This is why you'll see almost all hard rock projects now targeting downstream separation to bank some of the margin the sep facilities are making.
For IXR, the revenues are solid enough at the mine that IMO we aren't beholden to doing this. But if we were to build or JV in a sep facility then it does pay for itself. If you (IXR) was to generate an extra 70M in revenue (assuming you operate at say 30% margin), the facility will have paid for itself in profits within 5Years and so with a likely 30+ plus mine life with further resources proven to required confidence level it makes for a viable investment case. Though it is my assumption we will process our product via an already established facility.
Went on a bit longer than I originally thought but hope that's provided some clarity to the forum.
SF2TH
(20min delay)