My sentiment remains similar to what was mentioned here Post #:
53338352the summarised version is;
"in summary; it's a solid stock, i just invested elsewhere but would revisit my exposure (in rare earths - 'increase it') when the underlying commodity prices improve. I do like the story here a lot and should the 1.46% be proven economical at mine then you're onto a winner in the very long term given the separation offtake"The REO prices have been retracing since March and despite what some vacuous opinions are suggesting IMO, the underlying commodity pricing is what has caused a 30-60% sell off on most Rare Earth stocks from highs this year.
As such, in recent times, I haven't been increasing exposure in REO's in general. If you re-run most companies PFS/DFS on the current REO pricing they are not profitable. VML would appear to be running a similar strategy to LYC. Essentially, lets get into production irrespective on the economics such that they can capitalise when the commodity pricing improves. I'm quite surprised that there hasn't been anything regarding this even on stage 1.
Not saying it isn't economical, in fact i've suggested some rough AISC costs here myself on the 10% zonation based off rainbow rare earths (i dont hold) as they had a decently high grade.
Post #:
49874852 has that info if investors want to look into it.
"Here's the short version for rainbow700tpa production currentlyJORC grade between 7-12%Producing and selling a 50% concentrate.Basket price is $10usd they currently receive $3usd (payability of 30%)Last years financial would suggest it cost them 3M USD to run.means their AISC/t is around $4.3USD/kg. Revenue is currently $3USD/kg"Anyways it would be nice to know what the AISC from mine to separation is, such that shareholders and prospective shareholders can understand at what price point the stage 1 venture is uneconomical. I appreciate that VML has the downstream separation which obviously bodes well, so even if uneconomical at the mine (see above like rainbow) there's a shared profit arrangement with REEtec. Obviously they have their costs too as well. So less the opex for them and what's left over is profit. I have seen a few tables posted here previously (which i helped with) on the total possible revenue from the separated products. Namely the LREO (Nd Pr etc).
FWIW REO's demand/supply curve isn't set to really take off until 2024/2025. Speaking very loosely, I would envisage VML pushing ahead with Stage 1 and see what comes out in the wash in terms of underlying revenue and maybe profits, in the interim 18-24months perform the required due diligence, studies, met test, offtake, funding etc etc for stage 2. At which junction it's maybe 2023/2024 and hopefully ready to flick the switch on stage 2 in a period where the underlying commodity price has improved.
I still hold reservations (rightfully or wrongly) about profitability across most rare earth developers. LYC (i don't hold) has a much higher grade than most, has spent billions, has been doing this for 15+ years and only just became profitable in H2. (40M NPAT up from 4M the half before). Most PFS/DFS (including the stock I hold) are using projected (much higher) REO pricing and is fundamentally the reason why many of the stocks in the sector have been in development for 3-8years. Because the studies generally aren't reflective of reality.
The aforementioned paragraph refers back the LYC method. Get into production at whatever cost and hopefully you're profitable when the REO pricing improves. If in 2023/24/25 the NdPr price takes off Lynas will capitalise on that. It would appear VML will atleast have its Stage 1 hat to throw in the ring and time will tell whether the stage 2 hat is worth it - or is economic suicide.
Was supposed to type a 1 sentence response and got tied up in a typical SF2TH monologue...
In summary; I will invest in VML if.
a) Underlying REO commodity prices improve
and
b) RvR opportunity is better than increasing exposure on the stock I hold
and or
ci) Stage 1 or 2 is shown as economically robust through a prevailing SS/PFS/DFS
cii) Technical indicators on a long term time scale such as the weekly show a trade entry. (enter on trade stay for the Fundamentals as they are produced)
ciii) Something unforeseen between now and then causes all aforementioned thoughts obsolete...
Again as always, appreciate the civil reception here and will continue to post and provide value adding commentary whilst that is the culture. I'm actually in daily/weekly private dialogue with 2-3 posters from here so would not be saying anything I didn't think in their best interest.
SF2TH
(20min delay)