Even after the lousy REE price drop, Phase 1 is still making a decent 17% irr after tax. REE prices can't remain depressed forever, otherwise existing producers will simply stop mining, leading to constrained supply and the inevitable sharp price rises.
Note also how they're scaling back debt to equal equity. Previously it was one and a half times equity. That's prudent, but it means Astron will soon have another large-ish equity raise, depressing the price. Hopefully the Government pitches in with a huge, low cost loan.
Energy Fuels made the interesting observation that Donald has a great spread of light, medium and heavy rare earths. Coupled with the zircon and titanium product, the prices Astron receives over future commodity cycles will be as smoothed as one could hope for. As a long term holder, I'd much prefer a sustainable, continuous mining operation than one subject to booms and busts and the sheer difficulty of timing entry and exit points on ATR stock.
My only remaining doubt is the exchange rate of US$0.70c used in both their feasibility study and updated project economics. If they're saying it's a 40yrs+ operation, then they should have adopted an average US$0.75c. Then again, a rising Aussie against the greenback usually indicates we're in a commodities boom.
Barring unforeseen circumstances, they'll go ahead with Donald. Energy Fuels is itching, and if not now, when?
ATR Price at posting:
71.0¢ Sentiment: Hold Disclosure: Held
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