Exactly right, there's always ways to push the envelop on upside.
-Increase in holding
-Rare earth pricing increase
-Lower AISC
-Higher TPA - might run 2 more modules and do 5000tpa+
-Increased recoveries improve TPA usually reduce opex slightly too
-PE ratio is more than 20 for strategic asset
-Acquisition, JV, new projects. Who's to say after makuutu is in construction they start open eyes to other ventures. (P.s. i've sent details to the company of some projects.
-Vertical integration - JV processing facility
-Scandium credit profit bonus
etc etc etc. So you can easily go through and paint a picture for that side. Same again if you want to be conservative. Basically flip all those points.
Essentially i try to construct worst case economics and scenario's. If it still stacks up to yield an ok ROI then more than likely some of those conservative inputs will be wrong and i'll be surprised on the upside.
If you paint a picture using blue sky figures, sometimes if that doesn't come to fruition and now the investment isn't so solid. Learnt that in the lithium cycle where spod was going to hit 700-900/t long term and within 6 months and projects were going to be under their DFS AISC cost and ramping up to stage 2/3 within 12-18months. All those factors were wrong, and alot of people who projected immensely inflated valuations for stocks got burnt for not considering the alternative.
In this instance, rare earths could be similar. The advantage of IXR is simple. Geology. The reason ixr rare earth bubble won't burst is because it's geology is the exact reason why china has controlled HREO.
Supply shortages have created short term bubbles for rare earth developers but lack the understanding that their "ME2" baskets will compete with eachother in the event they go into non-profitable production and ultimate sink the profits. Same as brine lithium supply and potash as a by-product killing the overall revenue. With IXR's 90%+ concentration rich in the strategic and critical elements it's not as beholden to NdPr to generate profit. It's 50% of it's basket. discussed this in detail Post #:
50181881Just on the supply/demand discussion i posted some thought on this in Post #:
49761379".....he's really been reinforcing the fact that china's clay deposits are depleting in the next 5-10years which will cause a spike in pricing for HREO. Where he believes others will fall down is that when HREO demand lifts prices will bring on new supply to fill void. If players with NdPr rich hard deposits attempt to fill this because their baskets are not HREO and CREO rich they end up flooding the market with LREO and NdPR. This is not dissimilar from lithium brines whereby the by-product is potash. Essentially increasing the lithium brine output craters the potash price making it not a massive gain overall.If you look at alot of the other players, they're relying on huge output of TREO to generate revenues. with baskets driven mostly by the NdPr content it's competitive market. Most run 75% of basket value with NdPr.Whereas makuutu around 40% NdPr by price and another 40% in the Tb, Tm and Dy. Makes IXR's concentrate somewhat immune from a NdPr flood. With small operating margin, profits are heavily leverages to NdPr prices whereby a small change sends you underwater.Lynas is good example where exorbent amounts of capex are poured in to expand and improve recoveries and keep the revenues up."What i'm essentially eluding to is that it's fairly evident that HREO and CREO with be in high demand and overall drive prices. Hence why you see alot of rare earth project target NdPr Dy Tb Tm etc etc. The issue i foresee for hard-rock project is such that the HREO content as a function of % of price for basket is much lower. In laymans terms their basket contains a larger portion of LREO.Note the below; most deposit types are of the carbonatite associated with a few anomolies therein. Regardless there are a couple of other things to note. The below is the typical(average) content of deposit in the raw state. i.e. this is how they exist in the ground. Now post processing the HREO to LREO content can change. For hard-rocks, because they aren't cracking the rare earths the relationship of HREO to LREO remains fairly linear. Essentially there recoveries are linear across the elements. The advantage of ionic clays is they exist in a state that the prevailing processing techniques typically recover at different rates. Namely the HREO recover at higher percentages than the LREO, meaning that the HREO content increases as a % in the concentrate basket.
you can refer to the below and see that the Ce and La recoveries are lower than the high priced elements.
Regardless back to our convo of LREO and HREO. for IXR its LREO content (Nd, Pr, La, Ce) makes around $19 USD of its $53 usd basket. Dy, Tb make another $19 USD and another $10 USD for Tm, Tb, Lu.Now let's analyse the LREO as a function of basket.
With the exception of NTU whom's basket is quite unique 50% is actually Tb and Dy you can see that most other rare earth projects are heavily reliant on NdPr. So my point becomes that with increased demand we will see increased rare earth pricing. The issue most hard rock project will have is that they are all heavily reliant on the NdPr price and this is the primary profitable elements in most baskets.In short, it's a me2 product. Note the below, regarding economics importance and supply risk. If i took thePr, Lu, Y, Nd, Eu, Tb, Dy (which are all highest economic importance and biggest supply risk) this is $48 of the $53 basket. If i now exclude NdPr (so lets assume there's a price glut with every man and his dog targeting to supply this then IXR still has $26 of it's basket.
In short, IXR has a large enough NdPr content to get an economically benefit from the current price surge, but it's basket is not beholden to this and in time when/if the market is flooded with LREO (NdPr) included it has 50% of its basket value in the most at risk of supply and economical importance."SF2TH
(20min delay)