The right question. Ironstones are the reason I'm here, plenty of other companies exploring carbonatites plugs in the Gascoyyne and elsewhere finding out why only 1 in 100 get into development. I've done a lot of work on Yangi DFS etc, this post summarises the state of play for HAS as they struggle to keep up with rising capex and opex. From 2017 to 2022, capex doubled from $335M to $658M, opex lifted from $20/kg TREO in MREC to $25/kg and then to $28/kg in Feb 23 MRE update (not that I believe those numbers aren't still lowballed). In a market update conference call since Feb23, The CEO has since guided capex will lift to around $800M...
https://hotcopper.com.au/posts/66239994/singleYangi has some real benefits compared to the usual carb plug hosted deposits as DRE holders know, specifically
very high NdPr ratio
high recoveries of TREO to the bene mon-con
higher than average TREO% in the mon-con
high recoveries and relatively good costs in the hydromet plant to MREC
Downside is skinny ore bodies, high strip, high capex and opex being in West Australia. I like to refer to Australia in general and WA in particular as Tier 1 and Tear 1 mining jurisdictions, because the cost of operating here brings tears to your eyes... With the way greenflation, red tape, black tape, worker shortages etc are going it doesn;t look likke getting better any time soon either.
So Yin is DRE's flagship deposit with second mover advantages and disadvantages. DRE fast tracks their DFS piggybacking off 10 years of HAS work, but HAS gets ~$350M of government soft loans to try and get private funding the difference over the line and Yangi into development. Will the government cough up the same for DRE to duplicate HAS plant and infra next door? If HAS stuffs up any or all of the Yangi project development, then no (see SO4 who went broke with a lot of NAIF debt, rightly stopped dead any more salt lake potash projects receiving government funds). If HAS does it well, good chance between HAS lobbying and government reticent to double up plant and infrastructure, DRE is pressured into a shotgun marriage with HAS as the beneficiary and Yin as the dowry. Supports the economics of HAS and protects the very large amount of government loans... better one Gifford Ck RE champion than possibly two losers if the price cycle gets tough.
What to do? That $800M capex for a full hydromet MREC product is a big anchor no question. No surprise Tuck came out arouind the CR time with a plan to "produce a Yin concentrate on site" while avoiding any mention of hydromet. Drop the capex and opex right down to just a bene plant and sell a mon-con to third party for probably a higher NPV and much lower equity funding hurdle. I've posted detailed explanations as to why ILU and LYC might not have room to process ~30ktpa of Yin concentrate locally, so off-take is the issue with a concentrate only plan. The prospect of U&Th in the hydomet tails is problematic for many countries taking a mon-con (eg Malaysia and LYC) so it is a little problematic (although Japan has a nuclear industry and may well play ball with their AUKUS partner in the face of China RE-mag games). At the very least, DRE sells a mon-con to China for good money and damn the altruistic western supply chain thematic.
How much ore does DRE have or is likely to get? Yin is actually 9Mt @ 1.6% TREO and 0.49% NdPr with 5.5Mt of mineralised waste. Fenite is below Yangi processing cut-off grade (0.24% TREO, 37% NdPr avg for 0.09% NdPr when considering sending dirt from pit to waste dump or LG stockpile for later).
Even worse, Fenite is an aluminium-silicate
contaminant that reduces TREO recovery in the bene plant and in the hydromet plant. For that reason, HAS introduced an ore-sorter pre-float to remove Al-silcates from the ore feed representing about ~25% of ore tonnes but only ~5% TREO (similar metrics to the Fenite contamination in YIN's MRE table above). It's difficult to not send a certain amount of Fenite (edge of Fe-carb mineralisation) to the plant without too much Fe-carb ore loss, so I expect DRE will use the same technology to clean up their ore pre-float also.
Yin's >90% recovery to a 40% TREO concentrate float is a very nice start, but has zero relevance to Fenite. Collected from enriched surface ironstone samples, Yin's met work chemistry shows almost zero alumimium-silicates or carbonate minerals (LHS) while early HAS samples from diamond hole composites contains silicates and varying degrees of carbonates (SHC = shallow ore composite, DHC is deep hole composite).
So why include sub-economic fenite in Yin's MRE, when it is unrelated to Yin's met work and actively removed as a waste contaminant in ironstones next door... well, that's pretty obvious for a MRE released 28th Dec 2022 ...cough-cough
My point isn;t that I see everything through a cynical lens (Yin was good enough to trigger the freebies at 9Mt really), but that metallurgy is critical to the valuation of carbonatite related Re deposits as I keep banging on about. HAS can only get Yangi mon-con up to 27% TREO grade, requiring max capacity of 37ktpa hydromet plant. Oxide carb-plug supergene deposits are stuck around 15% TREO in mon-con, so 40% TREO for YIN if it's achievable in representative composites across the deposit is bloody fantastic. Yin con at 40% TREO would only require 21ktpa HydroMet capacity compared to 37ktpa for 27% TREO con... and hydromet is a very expensive business per tonne to process.
Even at Yin's lower 30% NdPr ratio vs Yangi's avg 37%, Yin at 40% TREO = 12% NdPr mon-con compared to 10% NdPr mon-con for Yangi (verses 3.3% NdPr for a 15% TREO oxide supergene con with 22% NdPr ratio
) Higher value concentrate is commands a premium price, = higher value = more economic. So when can we confirm an actual, real, deposit representative recovery and mon-con TREO % for Yin? Well, the BOD are probably sitting on the report right now and considering it's merits before release... I think it's a good chance that Yin's very clean and robust looking ferro-carb mineralisation, with some ore sorting clean-up work, will translate into close to 40% TREO mon-con which is a huge value uplift compared to HAS 27% TREO con.
So we arrive at Yin being good for maybe 7Mt mining reserve conversion form the existing 9Mt ironstone/carb MRE. I assume infill drilling adds some more ore at depth, stays the same along strike with infill, adds some small pits to the north in 2023 for 10-15Mt mining inventory including some fenite dilution into minimum size mining blocks. That is still enough for 10-15 years of 1Mtpa mine rate, producing approx 30ktpa mon-con, containing ~3500t NdPr. Lower NdPr payability in a mon-con vs MREC post-hydromet obviously, but my gut feel is economically feasible at the sort of prices HAS requires to make bank, but with the downside of limited off-take optins for a mon-con vs MREC product.
The value of another 15Mt of new discoveries by DRE is intimately dependent on the quality of the deposits. High TREO better than low, high NdPr ratio better than low, thick low-strip better than skinny pinch and swell, ironstone/Fe-carb style better than oxide carbonatite hosted, good met recoveries to high TREO con better than not... bla bla. The only answers to a complicated mineralisation in a complicated sector are complicated. Anyone who tells you the details are semantic and not worth considering early on is a fool imo.
Over to the fools...
GLTAH
(20min delay)