HAS have the first mover advantage in this area of the world and...

HAS have the first mover advantage in this area of the world and providing they get a mine off the ground and rake in some revenue then DRE and LRN are simply take over targets to add to the value proposition of HAS.I posted early on HAS Feb DFS update snafu at $6 was likely unwound by those in the know back to low $3's where it probably should be over the last 12 months. Yangi is incredibly sensitive to NdPr price as one expects, so if you're a RE bull then plug in higher prices and buy value. Until the final equity CR is locked down the price will always struggle as the market frets over how low brokers will push it before getting set cheaply one last time.

What price will broker clients and cornerstone investors like Twiggy be happy to take the punt on YangI is the question. HAS currently has an equity value (MC - cash) approx $250M, or $300M with NEO investment losses marked to market. Still seems too high to me, but at some point equity investors will say snap and pull the trigger. Given RE is hot, the potential for higher prices is good, NAIF support, European off-take support etc, I would think A$200M EV would do it (ie share price $2-$2.50 for discounted CR). I predict Wyloo will be a cornerstone investor in that CR, magnanimously swapping some of the con-notes for shares but at the CR price, not the con-note exercise price. A bitter pill to swallow for those who misunderstood the con-note deal, but funding is funding, and Wyloo now has HAS by the short and curlies.

@Daz707 "HAS have the first mover advantage in this area of the world and providing they get a mine off the ground and rake in some revenue then DRE and LRN are simply take over targets to add to the value proposition of HAS.".. this is spot on. If HAS could swap 7.5Mt from YIN @ say 1.37% TREO and 0.41% NdPr with lower grade ore, blending it with say 13.5Mt @ 0.95% TREO and 0.35% NdPr, they get 21Mt @ 1.10% TREO and 0.37% NdPr. Running that 21Mt on the Feb'23 MRE mine plan lifts LOM free cash by ~$730M and the higher-grade YIN would speed up payback and lift NPV more than proportionally. Spreadsheeted across a range of Mine Reserve grades and NdPr prices below for comparison.



Again, it's clear just how important a bit more grade or higher prices are. The grade sweetener of another Yin into the mix lifts financial return into acceptable range at $112/kg NdPr. That substantially de-risks the project for equity investors and leaves clear air for RE price upside if that eventuates. If YIN is the best DRE finds on their side Lyons (which is my base case) then Yin + a few extra bits and pieces is a stranded asset looking for a plant to monetise it. The sensible thing to do is consolidate both sides of Lyons fault into one robust project and share the de-risked financial upside. Trouble is, a deal won't be done for a while until DRE do enough drilling and accept their fate, which could be a couple of years away. HAS as first mover with a 'fundable' project won;t want to pay overs too early to consolidate either... rightly so.

Outcome 1 (my base case)
HAS gets the equity Cr required for FID and builds Yangibana, starting with Bald Hill and Frasers for quick cash generation. Unless DRE discovers the critical tonnage/grade to also fund a development they are screwed. NAIF is unlikely to double up the money to replicate plants unless DRE makes more big discoveries, especially if Yangibana struggles to make a lot of cash due to performance issues and/or lower than expected NdPr price. HAs waits a few more years until DRE is eventually cheap enough and desperate enough to accept the inevitable deal for YIN+. HAS got all the cards unless they start going broke.

Outcome 2
HAS doesn't get equity funding done because of marginal economics and waits until DRE have drilled enough to decide a merger of RE assets is a win-win outcome. More even balance of power between the two, DRE gets a better deal in merged entity. HAS shares would keep falling if years go by without the equity to reach FID, call it a merger of equals (DRE non-RE spun out).

Outcome 3
DRE has success replicating YIN like discoveries. Whether or not HAS gets Yangi up and running, DRE is justified to become a producer in their own right. If HAS does not get to FID over this time frame, DRE holds all the cards and eventually picks up Yangi cheaply to fold into the operation.

All very interesting considering the moving parts and marginal Yangi situation at spot. I would not suggest panic selling out of HAS, even if the trend and CR overhang portents lower prices. I certainly wouldn't be buying DRE until more 'economic' discoveries are actually made instead of assumed...

GLTAH