PM8 Peer comparison - Other REE projects analysis, page-843

Was doing some further research because ya know..thats what I do.

Starting with Longonjo.

Currently the Longonjo PFS is based 80% on the indicated category and 20% on the inferred category of the below:


This is at an NdPr cut-off grade of 0.2%.

Given the entire PFS is based purely on the weathered zone this is showing the below line:



Keep this in mind.

I was reading through the Mt Weld MRE and Ore reserve as of August 6 2018 (https://www.asx.com.au/asxpdf/20180806/pdf/43x2zf51z32gj7.pdf).

Looking purely at the measured and indicated categories they have the following MRE:



This MRE is based on a 2.5% REO cutoff grade.




A few interesting points here. Firstly the fact that Lynas used a 2.5% REO cut-off grade which is super high, but secondly that they claim this to be close to breakeven for direct cracking processing technology. Keep in mind Longonjo ore won't require cracking.

Now Longonjo PFS currently using a 0.2% NdPr cut off vs Lynas 2.5% REO cutoff. Not comparable just yet, lets go further.

We have to dig further into the Mt Weld ore reserve to obtain the data to apply against the Mt Weld MRE which I want to use to compare to the Longonjo MRE. The Mt Weld proven ore reserve contains an eye watering 20,000ppm NdPr, that's 2% NdPr grade which is staggering, as well as their 8.8% REO grades. (Yes I am aware the ore reserve uses a 4% REO cut off but as opposed to the MRE's 2.5% but thats not what im discussing here)



285,000 NdPr tonnes / 1,240,000 REO tonnes = 22.98% NdPr within the basket.

Looking only at the Mt Weld measured and indicated from the MRE it works out to be 39.5Mt @ 7.0388% REO. Thats 2,780,340 tonnes of REO. @ 22.98% thats 638,922t of NdPr.

2.5% REO cutoff * 0.2289 = 0.57NdPr cutoff equivalent.


The Longonjo PFS states 4,200t NdPr 35% REO concentrate (39%NdPr grading) will be mined for 9 years.
4200 * 9 = 37,800.

37,800 / 0.39 = 96,923t of NdPr will be mined over a 9 year mine life. Given the average grade of NdPr mined will be 0.61% that means for 9 years Longonjo throughput will be 15,889,016t of material.

Current ongoing drilling is planning to not only convert indicated to measured, but also inferred to indicated.

Remember from above that Lynas use a 2.5% REO cutoff which we calculated to be 0.57% NdPr cutoff equivalent for their MRE based on what they deem to be "breakeven for direct cracking processing technology". Keep in mind Longonjo ore won't require cracking.

If we take another look at the Longonjo weathered MRE, at a cutoff at 0.6% (closest to Lynas 0.57% equivalent cut off), IF Pensana can convert all of the current 8,390,000t of inferred resource to indicated within the current drilling program, that will be 15,600,000Mt @ 0.79% NdPr average grade (up from the current 0.61%), and above Lynas 0.57% equivalent cutoff. For the current 9 year mine life, the 15,600,000t will fall just short of the 15,889,016t of material throughput required.



We know from the company that they are looking to expand to what I am guessing is a 15 year mine life.

Using current grades and throughput, the material throughput per year is 15,889,016 / 9 = 1,765,446t.

For 15 years material throughput required would be 1,765,446 * 15 = 26,481,690t.

Taking another look at the table below, we can see that if Pensana were to convert all of the 14,900,000t of inferred resource at 0.5% NdPr cutoff, this would give 23,800,000t grading 0.71% (still up from the current 0.61%).

23,800,000 / 1,765,446 = 13.48 years.



This is why the current drilling is important. We all know that inferred resource estimates are unreliable, we also know there is plenty of resource at Longonjo, the key will be in the high grade inferred resource. If we can convert 100% (hypothetically of course), at a 0.5% NdPr cut off Longonjo could mine for 13.48 years before having to mine slightly lower grade resource.

In all likelihood, Pensana will improve the NdPr recovery from 39% to something potentially mid 40s IMO. This would then impact all of the above numbers and mean that less material will need to be mined (due to better NdPr recovery).

The above therefore IMO shows that Pensana will meet Lynas minimum NdPr cutoff of 0.57% NdPr of get very very close. Lynas higher grades and recoveries of course mean there resource will be more profitable. But applying the western world leaders minimum cut offs to Longonjo, Pensana can meet these minimums. Plus a strip ratio of 0.1:1 and no cracking required. Which is what Lynas minimums were inclusive of (greatly increases costs).

IMO goes to show the resource has all the right ingredients to make it to production.

No ramping, just maths. All IMO. DYOR.