actual see prices..., page-12

Hi all,

I guess the fact that there is a growing demand for the these scare rare earths indicates that the supply will probably will not be met. One of the applications that is emerging, is super light motors using Holmium because it has the highest magnetic properties of any element of the periodic charts. Erbium is becoming a high use element finding a growing application in fiber optic cables and so on...

As the engineers at the School of Mines have indicated, the creation of more of the HREE's and SEE's will create new applications and thus increased demand for these scarce elements. In fact, Neo Materials has committed to developing 30% of it's annual revenue (in the Performance Division) to develop REE applications.

It sounds like Lynas has considered this and a recent letter from Gloria Rogers (the Lynas contact) has indicated that Lynas will indeed use a toller to perform the actual separation...

"Dear XXXXXXX,
Thank you for your recent emails. Phase 1 of the LAMP is expected to produce 480 tonnes of unseparated HREE. We will probably sell this product to a toller to separate them out. For such small tonnage it was not deemed economic to build additional separation facilities at the LAMP. The fact is the CLD at Mount Weld does not have a high distribution of HREE so there’s little point in building greenfield separation capacity for these products when we can utilise spare capacity elsewhere."

Kind regards
Gloria Rodgers
Executive Assistant

(Thanks to NL on the Yahoo board for this letter!)…

Using an average price of $3,000/Kg may be reasonable given that Terbium is priced @ $2,800/Kg and Europium is priced @ $3,800/Kg. The lack of supply in the future could drive this price even higher.

OK, Gloria indicated that there would be around 480 mt of unseparated SEE's during Phase 1. Some quick math...

480 mt * 1000kg * $3,000/kg = $1.44b of unseparated Heavy (Scarce) REE's…

Of course this figure doesn't account for production cost's so lets assume $15/kg.. production costs'…"

480 mt * 1000kg * $$15 = $7.2m

$1.44b - $7.2m = $1.328b Profit for HREE''s of

$1.328 billion dollars.

Not a bad for a day at the office… Also according to Gloria this is only for Phase 1.

Anyway, the fact that Lynas is looking for a tolling agreement seems to bolster NC's commitment of horizontal integration. It seems that the vertical integration concept is making it difficult for many of the juniors to keep the plates spinning. Too many irons in the fire will make it difficult to focus on one area of the REE production.

While the performance metals industry (probable tollers) will make a handy profit it will be the actual commodity producers that will be the most profitable. While Lynas is clearly focused on the CREE's it looks as though the Scarce Earth Elements will provide a very nice punch to the bottom line… JMHO...