Your above posts seems to make sense. I also wasn't sure given the sample in previous testing was 10.5% and that's slightly higher than the JORC. But happy to use 40%
As far as i'm aware and as announced you are selling a mixed rare earth carbonate. offtake term sheet is here.
"Under the contract with Det’on Cho Nahanni Construction, the North T Zone at Nechalacho will be mined as a small open pit with material transported to Vital’s ore sorter for sorting to create a product suitable for further processing off-site at Vital’s Rare Earth Extraction Plant in Saskatoon which will produce a mixed rare earth carbonate product for sale to separation facilities."
"Subject to the successful completion of the construction of a mining and processing facility at the Nechalacho project site and commissioning of REEtec's commercial plant, Vital Metals will sell Vital Product to REEtec and REEtec will purchase such product according to terms and conditions set out in the Definitive Agreement."
The way i read that is you mine the dirt, goes through the ore sorter, goes off to VML saskatoon extraction plant turned into 40% concentrate level mixed rare earth carbonate an you sell it to REEtec for the below.
REEtec processes in their separation plant in Norway. Only then do you get the full value of each element as per the table provided.
The reason why they don't match up because this table suggest you sell 1000t/y of REO as per the offtake agreement. and if you do that you'll have a perfect 1000t of those elements worth x amount. if that was the case why would REEtec even buy the product.
The way i read this was that you're not selling 1000T (ex-cerium) of total contained tonnes of REO if you are then fabulous. but given you actually produce a 40% concentrate you would need to sell 2500T of a Mixed Rare earth carbonate at 40% concentrate which then contains a total of 40% REO i.e. .4 x 2500 = 1000T.
Furthermore because that table omits Ce which is apparently 50% of your concentrate you then need to sell 5000T of TREO. whereby 2500T (ex cerium) which is at 40% concentrate = 1000T.
So yes if 5000T of product p/a comes out the back end of your process circuit. (which includes cerium) then you will sell the tonnages and figures in the table.
If I can use an analogy to explain and i'll use coffee. i used this before in Post #:49687661.
a rare earth project full of lathanides, is like you having a massive pile off coffee grains all buried in the dirt. there's 16 different brands of coffee, some are cheap and nasty (Ce, La) and some are worth heaps. (Dy, Nd, Pr,). All these coffee grain aren't all in the same quantity they vary.
when you produce a saleable product, you dig up the dirt, try and get rid of some of the junk (gangue/dirt etc). This is basically like having those 16 different coffee brands diluted in hot water. this is your mixed RE concentrate/carbonate. Product in solution.
the amount of grams of total coffee grains in a given quantity total hot water is equivalent your TREO quantity in liquor. this is your concentrate grade. aka how strong is your coffee.
VML is suggesting hey we can make 40% MREC. Fantastic. Meaning for every 1L of hot water there's 400g of coffee in it. It's all different brands some are worth more than others.
You then sell it to REEtec. They get rid of the rest of the hot water separate all the elements so they are back to grains of coffee and can be sold as 100% pure. aka the price of the elements shown in the table.
So back to our table. If you sell old mate 1L of coffee with 400grams of coffee grains in there he's not going to pay you what 1L of pure coffee grain are worth which is what that table somewhat misleads IMO.
Most offtakes relate to the physical tonnes of the product sold not the total contained amount of useable produce. For e.g. lithium you sell a 6% spodumene. It's not done on total contain tonnes of lithium basis and you don't get raw price the lithium element. Rare earth is the same.
IMO VML offtake is for 2000T TREO which contains 1000T ex cerium. Given its a 40% concentrate you sell a total of 400T of total contain rare earths. therefore you need to do 1000/400 = 2.5 then grab that price of 42M/2.5 = 16.8m you also then need to give REEtec a discount to separate it. 50% is typical = 8.4m USD
If you think the table is correct then ask why Lynas who sells a 70% concentrated product is currently receiving $20usd/kg. Check their financial records and work back from total tonnes produced. Using my methodology i landed at that figure.
Yes they get 75% payability. higher grade produced receive less discount as most of the processing is done. Hope that makes sense. It's all very confusing and admit sometimes explaining can make it worse. Can reach out to the company, but confident they will clarify what i'm saying.
SF2TH
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