Ann: Date of Quarterly Report and Briefing, page-11

Just a reminder. Thanks suitsuefer

suitsurfer

477 Posts.

445

30/01/25

13:00

Post #: 77622849

Share

My notes from the Quarterly for period ending 31 Dec 2024.

Held via webcast on 30 January 2025.

(Please note - these are just my notes, with some of my own bias etc. So please DOYR. I also did not record all the questions/answers that have previously been discussed (like how long is construction etc.))

CEO Intro

- ARU will be a great counter cyclical investment (ie production timed perfect for Supply deficit for ex-china NdPr)

- NRFC were confident in their investment with lots of DD. But took time because ARU had to match and not conflict with debt and shareholder interests.

- Supply - ARU the only ore to oxide to move into construction in the near term. Structural supply deficit coming.

- Off take - expect soon large off take linked to equity. 2-1 (ie double the demand for ARU supply).

- Costs - running better than forecast (with cash ok for runway).

- Read to rock (and roll) upon FID

- Market conditions - NdPr pricing hitting ‘firmness’….investors need to distinguish between short term and medium term pricing. China lost money by suppressing prices….doubling of demand over next decade, ex-china market being formed, tariffs…….ARGUS Media are modelling that NdPr needs to increase 2-3 times from what we have today.

Question - Ex-China NdPr Market? People talking about ex-china NdPr market being formed. Doubters always talk about Lynas low offtake rates and ARU/ILU with no off take locked in. Assume tier one players out there want to lock off take for all the geopolitical reasons. But won’t lock in until FID to maintain their relationships with China. Modelling shows a supply deficit. Why has the market not responded accordingly?

Answer - CEO

- When negotiating with tier 1 they value security of supply (ie Av EV is $53k and NdPr is $55). They see this playing out in discussions (EV and Turbines) AND HAVE FLOORS IN THESE CONTRACTS ABOVE CURRENT NDPR PRICES. [Cop that! Wow. Best part of the discussion]

- In terms of market dynamics, they said there will be a structural deficit, so supply security will be first and foremost in companies minds. Last time this happened, the market went up to $200+ for NdPr. So likely to see spikes.

- As a sector there will be a move to create an ex-china price index…they are talking to a forecaster willing to establish this index…ARU need to put volumes….ARU can do this by using the 20% of Phase 1 remaining. [I assume other ex-china will put on there as well and create this market]

Question - ARU Phase 2 - Will Phase 2 be funded from savings from Phase 1….and profits in the early years. No need to return to the market? Ie no more capital raises to fund Phase 2?

Answer - CEO

- Intention to fund phase 2 out of phase 1

- Don’t foresee raising further equity

- learn from phase 1 to make phase 2 capex/opex cheaper.

- Phase 2 will become a processing hub….bring in from other projects external to ARU….will unlock Australian rare earth sector providing an avenue for processing away from china.

Question - No change in off take negotiations in last 18 months

Answer - CEO

- Hyundai/Kia. Locked in. [They must of renegotiated the CP dates?] So this is good news.

- ARU are using remaining off take volumes to bring in equity.

- Expect any future announcements to have off take and equity linked.

Questions - Trump policies etc.

Answer - CEO

- Support for EV in USA…only 12% global sales…..not worried about impact on ARU. If read executive orders….they refer to rare earth diversification and security. Will be good for sector…and very good for ARU….we are ore to oxide (processing ex-china)…..most others depend on china….Also ARU are construction ready…other rare earth mines have some time to go.

- Greenland….average time to find ore to production is 18 years……ARU positioned well. Most rare earth mines are only early stage…..so long time to go for them.

Question - timing on construction

Answer - CFO

- Still targeting FID end of the first half of 2025. These off take/cornerstone investors have their own processes and DD. ARU responsive…to help their processes. He did note that these off take/cornerstone investors have their own pressure to lock in supply…they see the supply deficit coming.

Question - EV slowdown in Europe?

Answer - CEO

- ARU not worried….look at medium term….when ARU will be producing. There will be blips along the way to EV growth.

- Compare EV to conventional. EV costs coming down. Charging infra filling out. Solid state batteries have fast charge and range. All points to increase in EV uptake. Demand doubling over next decade. Other companies say more.

Question - Will ARU consider a move downstream further from oxide (ie to metal)

Answer - CEO

- ARU already doing 95% of the value chain to a metal (ie ore to oxide)

- ARU don’t see the return is worth it. And Ex-china strategy means we don’t need to.

Question - Sulphuric Acid

Answer - CEO

- Not currently under binding off take

- Confirmed it will be better than merchant grade acid (MGA)

- Confirmed the ARU economic model sold at MGA prices

- ARU will look for customers of the MGA who can take it to battery grade….maybe.

- BUT MGA is very good anyway.

Question - Equity - Are we speaking to multiple cornerstone or are we at preferred stage?

Answer - CFO

- Still talking to multipole players…and have redundancies.

- Well above 50% for cornerstone equity…..

- The Debt and off take has focused on Korean businesses…..and likely to be similar for equity side as well.

Question - Are GE still in the game

Answer - CFO

- Hyundai are a key off take party….they might do equity…..ARU and Hyundai have an MOU around equity…not yet binding….ARU still see them as a target.

- It has been hard for some of these off take parties to invest in ARU because they don’t tend to invest at mine level…so they have to skill up etc.

- GE have maintained engagement with off take. However, GE turbine division had a restructure. This hasn’t helped…..so a maybe….but have redundancy in place anyway.

Question - Shorting

Answer - CEO

- Monitoring. But it is difficult to know who is shorting ARU.

- Equity raises in the past….ARU gave a bias towards investors with a long term mandate.

- If look at the current shorting levels….quite low compared to others in the sectors.

- Best thing they can do is focus on FID…and construction.

Question - Gas Contract

Answer - CEO

- I missed part of this, but I think the 4th Feb was just a date extension to allow ARU/Gas suppliers to agree a CP extension date.

- Announcement on that new date very soon.

- However, Gas supply in NT is improving with time….means better longer term options…means cheaper.

- Risk around gas is reducing.

Question - Could new tech affect design of processing plant

Answer - CEO

- ARU have a Dr….who looks at new Tech

- Separation has some new tech…but rest of the processing doesn’t have any new tech.

- If new tech….would look at for phase 2. Needs to be proven.

Question - Update on Gina

Answer - CEO

- Hancock….they have been supportive. They are constantly updated and supportive of ARU funding strategy.

Hope that helps some people here.

Overall I am feeling very positive. Big things coming (hopefully) soon!

Also....don't wait for Phase 2 to invest.... ;-)

My notes from the Quarterly for period ending 31 Dec 2024.

Held via webcast on 30 January 2025.

(Please note - these are just my notes, with some of my own bias etc. So please DOYR. I also did not record all the questions/answers that have previously been discussed (like how long is construction etc.))

CEO Intro

- ARU will be a great counter cyclical investment (ie production timed perfect for Supply deficit for ex-china NdPr)

- NRFC were confident in their investment with lots of DD. But took time because ARU had to match and not conflict with debt and shareholder interests.

- Supply - ARU the only ore to oxide to move into construction in the near term. Structural supply deficit coming.

- Off take - expect soon large off take linked to equity. 2-1 (ie double the demand for ARU supply).

- Costs - running better than forecast (with cash ok for runway).

- Read to rock (and roll) upon FID

- Market conditions - NdPr pricing hitting ‘firmness’….investors need to distinguish between short term and medium term pricing. China lost money by suppressing prices….doubling of demand over next decade, ex-china market being formed, tariffs…….ARGUS Media are modelling that NdPr needs to increase 2-3 times from what we have today.

Question - Ex-China NdPr Market? People talking about ex-china NdPr market being formed. Doubters always talk about Lynas low offtake rates and ARU/ILU with no off take locked in. Assume tier one players out there want to lock off take for all the geopolitical reasons. But won’t lock in until FID to maintain their relationships with China. Modelling shows a supply deficit. Why has the market not responded accordingly?

Answer - CEO

- When negotiating with tier 1 they value security of supply (ie Av EV is $53k and NdPr is $55). They see this playing out in discussions (EV and Turbines) AND HAVE FLOORS IN THESE CONTRACTS ABOVE CURRENT NDPR PRICES. [Cop that! Wow. Best part of the discussion]

- In terms of market dynamics, they said there will be a structural deficit, so supply security will be first and foremost in companies minds. Last time this happened, the market went up to $200+ for NdPr. So likely to see spikes.

- As a sector there will be a move to create an ex-china price index…they are talking to a forecaster willing to establish this index…ARU need to put volumes….ARU can do this by using the 20% of Phase 1 remaining. [I assume other ex-china will put on there as well and create this market]

Question - ARU Phase 2 - Will Phase 2 be funded from savings from Phase 1….and profits in the early years. No need to return to the market? Ie no more capital raises to fund Phase 2?

Answer - CEO

- Intention to fund phase 2 out of phase 1

- Don’t foresee raising further equity

- learn from phase 1 to make phase 2 capex/opex cheaper.

- Phase 2 will become a processing hub….bring in from other projects external to ARU….will unlock Australian rare earth sector providing an avenue for processing away from china.

Question - No change in off take negotiations in last 18 months

Answer - CEO

- Hyundai/Kia. Locked in. [They must of renegotiated the CP dates?] So this is good news.

- ARU are using remaining off take volumes to bring in equity.

- Expect any future announcements to have off take and equity linked.

Questions - Trump policies etc.

Answer - CEO

- Support for EV in USA…only 12% global sales…..not worried about impact on ARU. If read executive orders….they refer to rare earth diversification and security. Will be good for sector…and very good for ARU….we are ore to oxide (processing ex-china)…..most others depend on china….Also ARU are construction ready…other rare earth mines have some time to go.

- Greenland….average time to find ore to production is 18 years……ARU positioned well. Most rare earth mines are only early stage…..so long time to go for them.

Question - timing on construction

Answer - CFO

- Still targeting FID end of the first half of 2025. These off take/cornerstone investors have their own processes and DD. ARU responsive…to help their processes. He did note that these off take/cornerstone investors have their own pressure to lock in supply…they see the supply deficit coming.

Question - EV slowdown in Europe?

Answer - CEO

- ARU not worried….look at medium term….when ARU will be producing. There will be blips along the way to EV growth.

- Compare EV to conventional. EV costs coming down. Charging infra filling out. Solid state batteries have fast charge and range. All points to increase in EV uptake. Demand doubling over next decade. Other companies say more.

Question - Will ARU consider a move downstream further from oxide (ie to metal)

Answer - CEO

- ARU already doing 95% of the value chain to a metal (ie ore to oxide)

- ARU don’t see the return is worth it. And Ex-china strategy means we don’t need to.

Question - Sulphuric Acid

Answer - CEO

- Not currently under binding off take

- Confirmed it will be better than merchant grade acid (MGA)

- Confirmed the ARU economic model sold at MGA prices

- ARU will look for customers of the MGA who can take it to battery grade….maybe.

- BUT MGA is very good anyway.

Question - Equity - Are we speaking to multiple cornerstone or are we at preferred stage?

Answer - CFO

- Still talking to multipole players…and have redundancies.

- Well above 50% for cornerstone equity…..

- The Debt and off take has focused on Korean businesses…..and likely to be similar for equity side as well.

Question - Are GE still in the game

Answer - CFO

- Hyundai are a key off take party….they might do equity…..ARU and Hyundai have an MOU around equity…not yet binding….ARU still see them as a target.

- It has been hard for some of these off take parties to invest in ARU because they don’t tend to invest at mine level…so they have to skill up etc.

- GE have maintained engagement with off take. However, GE turbine division had a restructure. This hasn’t helped…..so a maybe….but have redundancy in place anyway.

Question - Shorting

Answer - CEO

- Monitoring. But it is difficult to know who is shorting ARU.

- Equity raises in the past….ARU gave a bias towards investors with a long term mandate.

- If look at the current shorting levels….quite low compared to others in the sectors.

- Best thing they can do is focus on FID…and construction.

Question - Gas Contract

Answer - CEO

- I missed part of this, but I think the 4th Feb was just a date extension to allow ARU/Gas suppliers to agree a CP extension date.

- Announcement on that new date very soon.

- However, Gas supply in NT is improving with time….means better longer term options…means cheaper.

- Risk around gas is reducing.

Question - Could new tech affect design of processing plant

Answer - CEO

- ARU have a Dr….who looks at new Tech

- Separation has some new tech…but rest of the processing doesn’t have any new tech.

- If new tech….would look at for phase 2. Needs to be proven.

Question - Update on Gina

Answer - CEO

- Hancock….they have been supportive. They are constantly updated and supportive of ARU funding strategy.

Hope that helps some people here.

Overall I am feeling very positive. Big things coming (hopefully) soon!

Also....don't wait for Phase 2 to invest.... ;-)