Thanks for the detailed analysis 2ic. Makes us all better investors. Apologies though, I've reviewed it and a couple of questions arose for me that lead me to think your analysis work may be flawed in key ways.
Amongst other things, you said: "Looked into the Feb 2022 DFS Update release and simply knew it wasn't right. No way can the grade drop 15%, opex costs increase 13% yet expect the annual average EBITDA to jump by $112M (61%) ...all driven by a measly 9% rise in NdPr LOM price assumption."
You've left out key changes in project parameters from 2019 to 2022. I note that while the 2022 DFS grade drops by 15% on 2019 DFS, what you left out is the 36% increase in ore reserves. The 36% increase in ore reserves gives the mine an additional 25% of operating life. This may explain additional drivers to the improved EBITDA. It's at this point I began questioning your analysis work because these are big omissions. It didn't help that I also read an earlier post of yours in this thread claiming opex is up 37% this year, when in fact it is only up 15% since 2022 DFS.
I'd also note that t
here’s nothing casual about the price assumptions across the 2017, 2019, 2022 and 2023 DFS'. All DFS’ go to painfully great lengths to explain assumptions made throughout. And it pays to remember that price assumptions are hugely conservative.
For instance, in 2022, HAS’ consensus price for NdPr oxide was US$112.00/kg. This is a conservative price estimate given the spot price at the time was US$170/kg. You could quickly google various spot prices for both Nd and Pr today and find prices either close to $200 or closer to$220p/kg. Let’s split the middle and say spot price is $210 today. This is a 23% spot price increase on the 2022 spot price of$170. Meanwhile, TREO basket prices are effectively the same between the 2022 and 2023 DFS. However, HAS' TREO content has increased nicely as detailed in the recent DFS announcement. So now there’s even more ore reserves than 2022 which means the mine life has gone from 8 years back in the day to 12 to 15 to now 17 years, and the NdPr content is up another 19%.
Another thing I've got to push back on in your post, whether you’re bullish or bearish, higher prices are 'fair' because that’s what the market is willing to pay. While OpEx has gone up 15% over the last 12 months, there’s been a 23% spot price increase ($210p/kg) on the 2022 spot price of $170. HAS is definitely winning. As to the SP being far less than its $6 a year ago, all I can say is the SP acts in mysterious ways. It's worth noting though that the 2022 DFS announcement was huge given the context of what had come before it. And remember, in 2021/2022, retail investors were buying stocks stupidly. Then recession talk happened and now there’s been a big pull back. But clarity? I couldn't help think after reading your post that you were willfully ignoring many variables that could make the SP move strangely in relation to good news stories coming out of HAS.
All in all, it's a compelling post you've done, but with a few key metrics ignored. Personally, I don't see any sort of untoward behaviour coming from HAS or other RE miners as you intimated. DFS' openly say error ranges of 15% are possible etc etc. and assumptions galore.
But as you say, a lot could go wrong in the future for HAS and other miners like it. I for one am hoping they keep bringing good news out like higher TREO content and larger ore reserves as they have done time and again for half a decade now.
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