tbh it's kind of a hypocritical comment from ausheds IMO as there was recently some announcements of met testing from HAS on the 'simon's find' area.
Essentially a .58% TREO ore sorted to .84% TREO and then beneficiated up to (note up to mean it was the highest results no context on the average) of 29% TREO.
The hypocritical part is that there no underlying economics supporting this either. They are however comparable process circuits in principle the that of the yangibana deposits. Which is obviously inherently important when feasibility is on multiple potential variable ore bodies.
Anyways, they market a "UPGRADE FACTOR!" of 50 times head grade, sounds awesome doesn't it. Essentially this is just saying we took .58% and made it (at most) 29%. 29/.58 = 50
But you could be an even better car salesman if you wanted to do the same thing for an ionic clay deposit.
Most ionic clays have 1000ppm TREO which is 1000/1000000 x 100. = 0.1%
The stock i hold is around 0.086%. They achieved a 92% concentrate grade.
Which is an upgrade factor of 1070!!!!! But carrying on like that would be completely repulsive as is totally meaningless until you understand a) the intrinsic cost of doing so and b) the received price for product. I did find it a bit gratuitous that HAS is still marking "world leading benificiation" when it out by a factor of 20 to any ionic clay project globally.
The hypocritical comments comes from the fact that aushed is criticising VML for performing met tests but praising has for doing exactly the same. How can one determine the economics of the process before understanding which process circuit is most amenable to the ore body?
Like with, hmmm, all projects you typically first perform preliminary met testing before determining the economics thereof.
Speaking of economics. For the record HAS is proposing a 15000tpa MREC at (up to) 52% TREO. again quite obscure wording of "up to" just tell us the average...
"Low" capex of 450M AUD. (i'd hate to see high if that's considered low but i suppose in comparison to LYC is it). noting that it actually goes up to over 600M aud once they consider the rest of stuff they omitted from PFS.
Irrespectively here's the rub. DFS
opex =
So a nice $17/kg opex cost for TREO. careful on wording. as it says TREO. Which is the oxide content with the total product sold.
Best metric is the total tonnes = 15000tpa and 142M cost. = $9.5/kg AUD.
The $17 comes from taking 15000tpa taking the ~52% TREO content = 7800tpa TREO then doing 7,800,000/142,000,000.
Note how they use basket price of $30 (this is in your head grade refer to blue columns in table below, today value is actually around $36 because pricing has increased since the DFS).
Well yes this is their basket but it's not what anyone would pay for their concentrate product. In fact they launched $50AUD for the MREC.
but also had disclaimer.
• Hastings has previously announced that three offtake MOUs have been entered with customers covering approximately 6,000 tonnes of the planned annual MREC production volume, with separated oxide prices used for MREC product pricing to be confirmed.
Basically we've made our own mind up about what the MREC is worth and in time we'll work out what it really is.
Irrespectively you can work it out. see below for concentrate constituents
can take the JORC and the concentrate make up above and make the following.
Essentially a MREC from HAS today is worth around $9.3USD/kg. = $12.3 AUD. A little lower than the $50 odd in the DFS.
So revenue of $12.3 minus opex of $9.5 = $2.8/kg = 42M AUD P/A.
Therefore 450M AUD upfront capital with 42M Npat with 11Y LOM gives -150M NPV. A negative NPV essentially means it's not worth the investment. If you understand discounted free cashflow you will understnad a negative NPV is possible despite making a profit.
Cautionary comments, resource is being upgraded and support longer LOM. Improvements may have been made to underlying economics.
However, if you take the PFS, simply use current pricing the NPV is negative.
If HAS does manage to get funding through a debt equity component (good on them) yes feasible to earn a profit. Although a debt component would affect underlying earning whereby the debt component is required to be repaid from revenue meaning that the NPAT is possible even lower under that arrangement.
Probably best for people to not come in throwing the hypocritical stones.
Disclosure don't hold long or short positions in VML, HAS or other hard rock project.
SF2TH
VML Price at posting:
4.7¢ Sentiment: None Disclosure: Not Held
(20min delay)