Always happy to give time for a brown-noser
"Why wouldn't DRE and HAS look to join forces in a hydro plant JV if it makes their product that much more valuable."... No need for a long time because the size of sensible operations is already a fraction of identified resources. HAS bene plant design is 1Mtpa, producing 35,000t pa of mon-con. Yangi already has 21Mt in reserves, at least half of that stacks up as similar value as Yin, maybe the half is higher-strip, dilution and higher cost. If HAS builds a hydro-met plant, they can feed it with their own mon-con for >10 years already, so why buy Yin off DRE now or share the Hydro-met's 35ktpa capacity?
If they double the hydro-met to 70ktpa, they still won;t need DRE ore for quite some years. There is some economies of scale with hydromet plants, but a large percentage of costs are proportional to annual volume. Still, it would make more sense and be more economic to double the size of HAS hydromet plant using the same infrastructure, permits, employee base, knowledge advantage than to re-create a separate plant. Same logic applies to merging DRE's Mangaroon into Yangi's operation and expanding annual production without doubling up all the capex of a duplicate operation.
None of that helps DRE, who can't sit idle for years waiting on a reasonable offer from HAS to M&A. HAS will focus the next 5+ years on building, ramping up and hopefully perfecting Yangi as either a mon-con only or downstream hydromet operation, paying down debt etc. DRE need to push ahead with some plan to build their own mon-con operation (and Yin is large enough at 1Mtpa to accommodate a duplicate operation) and hope the numbers stack up.
The big risk as I see it, is Yangi proves to be marginal, market doesn;t like it and prices DRE down by association, government doesn;t double up it's $350M soft loans for DRE to duplicate a mine next door to Yangi, and Yin+ becomes a stranded asset waiting on eventual M&A (either HAS, or ILU or similar). On the other hand, If the REO prices double and Yangi proves highly profitable then of course the markat will love Yin+ and happily fund DRE to build a duplicate operation if HAS won't pay-up a fair price to merge. Same thing sometimes happens in the goldfields when two large, profitable deposits are discovered near each other by different companies.
Dean likes to talk about DRE second-mover advantage, which is real enough for feasibility studies and permitting. There is also HAS first mover advantage, hoovering up the government subsidies and either stuffing it up for everyone else or ending up with an infrastructure, operational and balance sheet advantage. Unless REO prices run higher and stay there, Mangaroon is hostage to HAS's outcomes and share price. The question is what NdPr price deck makes sense to fund a mon-con only operation? The answer may well be 'guessed' shortly in HAS DFS Update (again
) and then proven definitively in a few years time after the operation is built and ramped up...
Good luck
(20min delay)