Take with a massive grain of salt as there isn't a huge amount of detail and I've only performed a cursory observation.
If there's more data for exactly the lathanides composition (inclusive of TREO grade) that would be a great start.
I'll try and work some stuff backwards. Reported head grade of Nd203 was .047% beneficiated to 12.3%.
The type of method to process would see a fairly linear response across the TREO. That is to say a 26 time improvement to Nd will have likely had such effect on the concentrate. (Note the 26 times upgrade is a bit of car salesman type lingo. I mean it's accurate, but for context ionic clay rare earth deposits get around 1000 times upgrade. The rub of the story is how much does it cost to do this and what revenue might one expect.
Concentrate reporting ~40% TREO. 40/26 = 1.53%. So the first question an investor would need to ask, is this analogous to the average grade of the ore body? I note that their is no JORC or a pool of drill results to make an estimate and that's ok very early stages. Yes I can see the rock chips, and they are an indication of mineralisation being present but not usually representative. Like find a nugget of gold on the surface, not accurate to assume the area is that grade. So imo that's something to look for in the future. wide intercepts of 1.5%+ grade. Then you can be assured that a 40% concentrate grade can be produced.
Comparing to HAS.
Without spending far too much of everyone time on a REO crash course i'll keep it simple but feel free to search my name for further posts (about 2years worth) across a few rare earth stocks which have the existential detail to support the below.
Blue stuff is unprocessed dirt. It's the composition in ground. The TREO of 11000 is 11000ppm = 1.1%. Note these ppm values can vary depending on whether i'm looking at JORC or the reserves or old data. Think they're around 9700ppm or .97%. so apologies if the figures have been updated since, it doesn't make a material impact for the purpose of explaining.
Noting TREE is simply the oxide form of TREO. If you're interest the below is the conversion from element to oxide version for each element.
| Column 1 | Column 2 |
|---|
| 1 | La | 1.1728 |
|---|
| 2 | Ce | 1.1713 |
|---|
| 3 | Pr | 1.1703 |
|---|
| 4 | Nd | 1.1664 |
|---|
| 5 | Sm | 1.1596 |
|---|
| 6 | Eu | 1.1579 |
|---|
| 7 | Gd | 1.1526 |
|---|
| 8 | Tb | 1.151 |
|---|
| 9 | Dy | 1.1477 |
|---|
| 10 | Ho | 1.1455 |
|---|
| 11 | Er | 1.1435 |
|---|
| 12 | Tm | 1.1421 |
|---|
| 13 | Yb | 1.1387 |
|---|
| 14 | Lu | 1.1371 |
|---|
| 15 | Y | 1.2699 |
|---|
Anyways it's common that HAS and other will talk about "basket price". It's very important to know whether the basket is talking about in ground (blue) or post processing (orange). Note below. The LREO elements (Nd, Pr, La, Ce) recover better than the HREO elements. For HAS it's revenues are driven largely around Nd Pr. with most almost 70% coming from Nd. It is ~33% of the TREO content.
In the report met work DRE has done Nd is around 30% of the TREO content. So that's about right.
The below represents a 52% TREO concentrate, i recall they may even be at 57% now.
View attachment 3544607Essentially this 52% TREO concentrate would sell for $11.7 usd/kg in todays market. If this was 100% concentrate you get 100% of the element basket = $45. but it's 52% TREO. so straight away half the amount of TREO in each kg means half the price. which is why it comes down to ~$24. But now you also need to accept a discount. Why? well why would i (the refiner/separator) pay you 100% value of the content of the TREO. typically hard rock projects receive 40-50% payability. Can google rainbow rare earth gakara and it proves they get even less. If you think this is nonsense i used the same methodology and accurately calculated Lynas's average revenue.
The part missing and it's the key ingredient is, what is the cost of the methods used by DRE in a commercial sense. This is something typically entertained in the SS but i wouldn't expect them to have anything on this. The met work they've done is pretty much exactly the right thing to do. There's no point drilling and spending millions to only find that you can't process the dirt.
So all in all my assessment would be;
-Nd/Pr content would appear lower but close to the Nd/Pr content of HAS
-40% concentrate grade is typical target for monazite processing. Noting HAS is around 52-57%.
-Resource size and grade are unknown. They will need to drill and delineate an ore body which lends itself to a similar mined ore cost.
-Once done, a met tests on a sample analogous to that grade will be key.
-Deleterious elements not reported. Thorium/Uranium content is imperative and can easily bury a project with the additional capex/opex to treat and manage. the elements are present in all deposits just at varying degrees. Hard rock processing typically produces radioactive nuclides which need to be managed accordingly. The lower the TREO grade and higher the Th/U content the more radioactive material needs to be handled.
All in all from a pure met perspective, if you have similar grade to HAS around 1% TREO your revenues will be similar if you can get 50-57% TREO concentrate. and not 40%. Higher grades may offset lower revenue by meaning less tonnes processed
Note *i do not hold HAS or anything other project mentioned and my comments do not infer HAS to a good or bad investment.
I actually was reading on DRE last week on the Cu results. This REO results are interesting, but it needs some cores for me to know there's the resource size and secondly understand the composition and grade of the actual ore body. Haven't looked much into the other projects but i'm sure most invested prior to this announcement anyways so anything discover here is a bonus. Good place to be.
wish everyone good fortunes here.
SF2TH
(20min delay)