Had a bit of time to read through the quarterly and overall I get a strong sense of positive and systematic progress in regard to both Dubbo and the KMP.
Clearly lots of parallel workstreams going on with Dubbo. EPCD underway with logical milestones albeit a second half 2024 completion seems a long way off. Which goes a long way to understanding the generality of finance discussions that are happening. EPCD will drive the business case on the capex side and that needs to be known before any form of project funding will materialise. By which time some non-binding MOU’s and offtakes should be in the bag that will give lenders confidence on the revenue side of things.
Just have to ensure ASM has funding to continue this Dubbo work for the next two years and the revenue from both government grants and KMP is essential for that. Having a decent cash pile of $72M is reassuring although a good chunk of that will be needed to service those Korea Bank loans?
I am a bit surprised the Development Consent Modification is still ongoing but it is not critical path so no real concern.Very happy to see the preliminary work underway to produce Dubbo sources samples of zirconia and dehafniated zirconia and potential buyers being engaged for same. I love the win-win principle of dehafniating the low value zirconia to produce both high value dehafniated Zr and very high value hafnia. That’s a real differentiator right there! And the pricing of Hafnium at record highs is great news. I recall Dubbo was going to cap production of Hf to low values (30T/yr?) so as not to completely destroy the market. I wonder if the market demand is not there such that they can process and sell it all?
And the Marubeni MOU, albeit short term, is the perfect way to keep pressure on the Koreans to keep playing ball, to which end I see KCF still in the loop. Plenty of politics at play here!
Some decent detail around progress at the KMP with NdPr being sold and NdFeB maybe soon. Binding agreements for both products are imminent it would seem. My only concern here is that the new ESG friendly, low cost LK process for producing Nd and Pr is still not being used? Or am I missing something? Will it ever? Unlike for the CuTi where they also seem close to offtakes. Will the LK process be used for the new Dubbo oxides that are due to arrive for metallisation testing (Zr, Hf, Dy and Tb). I would hope so since most of these have already gone through the old pilot plant and LK process back in the days of ALK I recall.
On balance a great quarterly and hope for a retun to $4 over the course of 2023! GLTAH
ASM Price at posting:
$1.92 Sentiment: Buy Disclosure: Held
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