Barry Fitzgerald's article on RE yesterday (see below) asks if anyone can make money at these current prices?
Surely anyone with even a vague understanding of marketing would immediately leverage this opportunity to publicise Lindian's profit potential and much quicker time frame than MEI?
Come on Alwyn and Linda, this should be easy?
If you can't/won't do it, find someone who can? These are rare tactical opportunities to get lots of immediate attention and Lindian keeps missing them?
RARE EARTHS:
Hasa turning point arrived for beaten up rare earths pricing?
Despitebringing the stuff required for permanent magnets and other technologiescritical to global decarbonisation, and military applications to boot, priceshave slumped in recent times from $US150/kg to $US45/kg.
Itis a market controlled by the Chinese with its biggest producer China NorthernRare Earths accounting for as much as 60% of the global market. But even itcan’t make money at these prices.
Itrecently posted a loss for the June half. If it can’t make money at currentpricing, then it has to be assumed that Beijing will soon be turning itsattention to managing prices higher through its export quota system.
Apartfrom the losses being incurred, Beijing could move on a supply response – i.e.reduce export quotas – on the argument that it is being hit left right andcentre by tariffs in the US and Europe so here, cop that.
Noneof the industry followers are expecting a quick rebound in prices. But it isnow assumed that the bottom has been reached and prices will grind higher fromhere on, with Beijing keeping an eye on price upside to ensure the westernworld’s build out of its own rare earths supply chain is not overlyincentivised.
METEORIC:
Soif China can’t make money from rare earths at these prices who can? No one can,unless a rare earths operation slated for first production in 2027 is includedin the discussion – Meteoric’s (ASX:MEI) Caldeira project in Minas Gerais,Brazil.
Basedon its scoping study released on Monday, an initial $US297m development(excluding a 35% contingency) at a mining rate of 5mtpa producing 3,000tpa of contained NdPr over 20 years would generate an IRR of 14% atnear spot pricing, or 38% if the $US111/kg life of mine pricing assessment byindustry consultant Adamus is used.
Itscash generating ability gets down to its ionic clay status which delivers thesort of low capex, low opex the best of the Chinese operations enjoy. Given thehigh-grade resource base at Caldeira is actually a big multiple of thatconsidered in the scoping study, the project is clearly on the way to earningits Tier 1 stripes.
Tier1 operations survive at the very bottom of commodity cycles and thrive inhigher pricing environments. It is a handy trait to have in the ever-cyclicalmining game, and an appealing one as well as governments around the world arelooking to break China’s grip on rare earths.
Havingsaid that, the market in Meteoric acted strangely in its first pass assessmentof the scoping study. What was an already beaten-up stock last Friday at 18c ashare was sent lower to 13c in response to the scoping study. In Thursday’smarket it was 13.5c.
Thecapex estimate was certainly higher than what the market had been pencillingin. But that was about it in terms of any negatives.
Thatcame through in analyst notes on the scoping study. Bell Potter cut is shareprice target from 50cps to 40cps while Barrenjoey cut from 50cps to 47cps. Bothare still multiples of the current share price.
Barrenjoey’sshorthand assessment of the scoping study was that it highlighted a Tier 1development project in rare earths.
“Thescoping study released today confirmed that operating costs can be in the lowerportion of the cost curve due to very little stripping free dig mining, andlittle requirement for crushing/energy in processing,” Barrenjoey penned.
Itsaid that while capex (including the contingency) was 34% higher than it andthe market had been estimating, the opex is materially lower at $US21/kg lifeof mine.
“Theproject is expected to be cash flow positive at the current depressed spotprice of $US45/kg and make an IRR of 14%. We think this highlights the highcalibre of the project relative to industry peers,” Barrenjoey said.
(20min delay)