All this time, with leverage of 20% ownership, and HAS comes out...

All this time, with leverage of 20% ownership, and HAS comes out with a quite meaningless non-binding agreement that 'sure, if Yangi gets up and running NEO would look at taking MREC feed for our separated RE-oxide and magnet plants (present and planned), at a market-based price like anyone else had MREC feed to sell us'... NS sherlock

I spent a day researching HAS, LYC, ILU, VHM MREC and separated RE-Oxide reports to get a good handle on the ex-China industry costs and how any Toll Treat arrangement would stack up financially for HAS. As you would imagine, locking down reality from ASX reports is like herding cats, especially HAS who continue lead the way in deceptive and misleading reporting. ASX should be ashamed to allow data unsupported and non-industry variations in what should be 'normal' project metrics for major feasibility updates.

These documents are critical, value defining, yet companies can get away with paper thin, highly selective and manipulated reporting no worries. Look to Canada and USA for how it shoudl be done. 150 page type documents with ALL the supporting data and working whether it reads well or not is the minimum requirement over there. Spin the headlines however you like, but investors will have the chance to check everything for themselves if they choose... as it should be yeah?

I may or may not post a detailed summary on the other thread, though to tbh I'm losing steam wasting time on this dog. If people go to lie down with dogs, well that's their choice and good luck regardless (though class action on the Feb22 DFS looks fair to me). As per this non-binding off-take agreement, which makes little sense, it's still all about how to economically get low-grade monazite (with low grade U&Th) into a MREC product RE-Oxide separators cum metal/magnet producers like NEO. But who/where will Toll Treat Yangi mon-con, what will they charge and what margin is left for HAS to make bank and leverage into their own, more expensive MREC production?? Some factoids...

Yangi RE-Con at NdPr US$130/kg (inc 13% VAT) is contains A$21,000/t of TREO at 60c USD and Stage 1 Update assumptions.

Yangi's Update was clear(ish) that Stage 1 LOM average Total-Cost (opex, D&A, plus non-Opex) to produce RE-Con was A$8000/t over a 17 year mine life.

Yangi post-RE-Con loses ~17.5% TREO/NdPr during MREC (13.7%) and RE-Oxide Serperation (5%)... or A$4000/t to waste streams.

ILU Eneabba in 2021 DFS (before subsequent inflation/reality) has costs ~A$6000/t RE-Con in Opex to produce MREC then seperated RE-Oxides (remember Separated-RE-Oxides is ~100% NdPr/kg pricing as such).

D&A on a A$1.3B MREC-Sep Oxide plant is considerable, but varies depending on the depreciation time frame. Assume 15 years straight-line depreciation (generous because new magnets or other tech might make the plant obsolete before then) = $87Mpa. On a 36ktpa feed that's $2400/t RE-Con feed. Plant can ramp further for economies of scale, but there is both serious inflation since 2021 and probable sustaining capex, plant replacement not included in D&A. It has to be material.

So, $21,000 (in RE-Con) - $8000 (Yangi costs) - $4000 (recovery losses) - $6000 (MREC and Sep-Ox costs) - $2000 (D&A to be generous) would leave HAS sharing in $1000/t RE-Con profit margin by way of ILU Eneabba example/costs. Basically a rounding error or zero profit left over for toll-treat, when Eneabba costs $1.3B to build, over $200Mpa opex to run at 36ktpa RE-Con feed.

Given how expensive and risky running a $1.3B RE-plant and the annual costs that go into it, anybody would be wanting to see a 20% return on investment to even look at such an operation. 20% of A$1.3B is $260M, half each for MREC and Sep-Oxide, so $3,600/t RE-Con feed to MREC profit margin to ILU minimum.

Good news is, at US$173/kg NdPr (I calculated was the new Update LOM average sale price assumption, though another look and I think that figure is 12% higher again) Yangi RE-Con contained TREO jumps to $28k/t from $21k/t, meaning $8,000/t RE-Con available for profit-share. $4,000/t to ILU and $4,000/t to HAS. That's $138Mpa to HAS approx free-cashflow before tax, and about %20 higher than their Update owner-operate model on account I used lower costs and D&A for Eneabba than Yangi. At >US$173/kg NdPr, the profit-share Toll model makes less and less sense because decent margins that Yangi should finally deliver and keep at very high prices are now being shared.

Of course it makes no sense for ILU to Toll Treat Yangi RE-con into MREC when they run a MREC-to-Separated Oxide facility. It makes no sense for LYC to Toll through Kalgoorlie and profit share on Yangi RE-Con when they have a lifetime of very cheap Mt Weld RE-Con they own to feed in and share profits with nobody. I calculated/guessed Mt Weld is producing RE-Con (at 33.5% TREO not 27% like Yangi) for only ~A$2700 in FY22, on account Mt Weld is so high grade thus small tonnage ore-feed. In FY21 for example, they didn't incur any new mining costs because they had enough ore stockpiled from the last short mining campaign in FY20. Until recently, they would add stockpiled >30% TREO ore straight into the bene plant RE-Con DSO style, because at that grade it's not worth the cost of float beneficiating. Just saying...

HAS need not just to pick-pocket Aussie and US tax payers to fund Yangi, they also need a new MREC Toll operator who doesn;t own their own ore source and is prepared to build a plant that only makes a 20% ROI at $173/kg NdPr using Yangi Ore feed. Maybe a larger, multi-feed operation built in cheaper countries could do it (and take the U&Th waste) but they then need serious fixed price assurances to take the risk against going broke if US$173/kg NdPr doesn't eventuate... even with subsidised funding.

That's the biggest thing missing form today's off-take deal, again, any fixed price off-takes on a ridiculously high-cost project. This variable price index-linked pricing model has go-broke or profitless-zombie mode written all over it... and it's going to keep the high-cost, high risk hard rock guys on the drawing board until/if it changes imo.