Ann: More Outstanding High-Grade Rare Earths Assays, page-47

Hey all, apologies because I gave LIN the kiss of death with a first purchase at 36c. Should have posted earlier so others could stand back and avoid my usual 10% post-purchase drop. 36c buy-in wasn't a coincidence... knew a 10% fall would take LIN to the 33c CR support, hoping that would save me losing more fingers like those purchases I drop over 10%. Each day starts with a nudge down another notch, then does nothing much until close where it gets another little shove down.

CR placement shares should be out today sometime, depends on how many were just buy-wholesale, sell retail flippers not in for the long-term. Always a good few only playing for a stag profit or easily spooked and then off for the next one. I might have gone too early, but zoom out on the chart and no question I've gone way too late. Never gave LIN Kanga more than cursory attention due to holding min sand RE exposure, but understood it was 'good'. Tough for me to chase planes down the runway after take-off, especially when a CFO friend out to dinner few weeks ago talking about tax loss selling tells me he has heaps of LIN profits to wash. He had zero idea of RE's (I mean zero) but a friend told him early LIN was going to pick up this Malawi deposit so get in quick... which he did and sold all the way up from single digits. Hard to walk away not feeling like anyone buying on market mid-30s is bag holding bunny...

So why am I now buy mid-30's when so many are sitting on or taking profits? Quality deposit at a good price in short obviously. Having spent some time studying the RE market and wannabe miners there are a number of hurdles to clear that will separate a few survivors from the mass extinction event coming for the other evolutionary dead-ends. Hurdles Include; low capex intensity and opex, scalability and long mine life, low U&Th and acceptable sovereign risk. There are four deposits ex-China that make my list; Mt Weld, Moutain Pass, Kangakunde, Caldeira (MEI, ionic clay). There are some very good high U&Th min sand deposits, but outside China storage of radioactive waste seems an almost insurmountable obstacle, thus loss in strategic value to the West.

All this holders already agree I'm sure, though I have some thoughts on Kanga metallurgy advantages that are worth sharing another time. This post I went over the price chart and release history to consider the situation regards value-add vs price since last year. The run up from May to Oct is self explanatory, be it insiders or ticking boxes the price ran on confirmation of 100% ownership of a deposit already known to be top tier, and obviously why LYC tried to buy it 20 years ago.


Profit takers eventually overwhelmed new buyers, retracing before first then second drill assays kicked it back into gear. One could argue those drill releases demonstrated a larger and more continuous RE-carb deposit than historical drilling and MRE's indicated. At the very least results confirmed what LYC had hoped Kanga was. Similar story through multiple drill releases and importantly great met work. Especially this last lot of drill assays, which demonstrate a step up in grade at high tonnage well beyond what I think early geo's would have expected. Grade is incredibly important early years to maximise free cashflow, so these higher grades from surface really add NPV without demanding large scale high capex.

Nothing holders don;t already know again, just trying to quantify the value-add vs the price action. Technically, price has hit ~30-32c 3 times as resistance, then once as support, and so looks a likely place to hold as support again. While all this new drilling has been adding 'value', the falling RE price (and analysts longterm price expectations) has been removing value. I've come to the conclusion LT NdPr prices may get stuck around US$100/kg for many reasons, which is the industry headwind many stocks have yet to reckon with. Fortunately, Kanga is ultra-low cost, so it will comfortably makes lots of cash while guaranteeing NdPr supply to the west without the risk of insolvency driven supply disruption (or share price near zero zombie producer status at best).

Regards sovereign risk, yesterday's RIO investment in SVM goes a long way signalling Malawi is a lot better than many almost uninvestable African countries. Another value-add from my big-4 hurdles for strategic value premium. Add in the deposit size, demonstrated by what looks like 250Mt @ 2.5% TREO to ~300m depth, with two ~1km deep holes guided as more of the same even though it's odds on a couple of holes won't hit the really good stuff. I read the plan is Stage 2 1.5Mtpa, then up to 3Mtpa by 2030... but that looks way too small aside from the fact there is only so much new RE mine supply the market can handle (my theory the market will settle down into large supply from only a few mines). Billion tonne deposits averaging 2.5% TREO should not be mined at 3Mtpa... where's the economy of scale?

Finally, and my favourite, cheap and easy mineral sands like gravity processing scalability tugs at the heart strings and flexes the greed valve. Floatation con is so expensive and usually difficult to scale up in carbs where one might need 4+ stages of float, all with their own weird and wonderful collectors and reagents, flipping between highly acid to basic solutions, sticky gangue minerals, low quality con etc.

This isn't a short term play for me, though hopefully the MRE and PFS focuses the market on some of Kanga's world class attributes. I'm strapping in for the ride until M&A puts this hugely strategic deposit in hands of a major who can develop it quickly and appropriately to supply the west with a large slice of it's ex-China RE-mag needs.

GLTAH