Argonaut NTU research

Hi @Ashentegra ,

Thanks for sharing the recent Argonaut report on NTU in Post #:69747962, it's always good to get a new perspective on the Browns Range project and it looks to be very thoroughly researched, even if it is from a broker/sellside perspective. Unfortunately it was dated 1st August, pre the last equity raise so their per share valuations would need to be recalculated based on the new SOI.

They make some interesting points, which in my view should help investors form an reasoned opinion as to the eventual viability of Wolverine xenotime concentrate proposal while we wait for the DFS to be published;

• The relative proportions of 'Light RE's' Nd/Pr v. 'Heavy RE's' Dy/Tb required in the high temperature operating environment RE magnets for EV traction motors and offshore turbine generators means that the predominant mineral sources of magnet RE's, monazite and bastnasite, cannot be relied on to meet future demand for the HRE elements needed for the "electrification of everything".
• The major source of these HRE's currently is IAC deposits in southern China and Myanmar that rely on environmentally catastrophic in-situ leach recovery processes to make them economically viable, which in addition to the supply risk and strategic baggage between PRC and the ROW make them untenable suppliers in the long term for 'Western' end users.
• Non Chinese and Myanmar IAC prospects all appear to suffer (with the possible exception of MEI's Caldeira project in Brazil...TBC) from low grades/low IAC proportions/ low recoveries and high mining costs associated with having to mine and shift all that very low grade ore from pit to leach pad and then back to the mining void... that's an opinion based on my unprofitable delliance in IXR's Makuutu project...
• Another major possible source of HRE's are xenotime deposits, either as minor mineralisation in mineral sands deposits such as the WIM deposits of Western Victoria and Southwestern NSW, or hard rock deposits such as Browns Range. An issue with the WIM deposits is with xenotime being a relatively minor component in comparison to the Zr/Ti and monazite in the VHM mix, it's always going to be considered as a by-product and not likely to greatly influence FID's on these projects.
• Another issue both with IAC's and MS/VHM deposits is that in accessing the HRE's they would also be producing substantial quantities of LRE's, further throwing out the relative supply in-balance of LRE's & HRE's, which theoretically would lead to lower Nd/Pr pricing thereby affecting the Lynas'/MP's/Illuka's and all the other potential non-PRC NdPr producers profitability.
• That leaves the very rare hard rock xenotime deposits, of which Browns Range is far and away the largest, highest grade and best understood from geological, mineralisation and processing perspectives, making it IMO an extremely strategically important resource from an Australian & ROW ex. China perspective.

Apart from the strategic navel gazing above there are some other quantifiable assumption they have employed that may help us spreadsheet jockeys tweak our models;

• Payability, being the proportion of the value of the RE oxide basket that accrues to the RE concentrate producer (NTU) in comparison to the downstream processor (ILU). Based on reported payability for monazite and bastnasite concentrates produced by Rainbow RE's and MP Materials and sold into PRC, I've assumed a 30%/70% split between producer and processor. But given the higher REO basket value of the xenotime concentrate, the 40%/60% assumption in the Argonaut models would appear reasonable.
• Long term Browns Range REO basket pricing assumptions of US$75/kg (eq. to US$100/kg NdPr, $US450 for Dy and US$1,350 for Tb) are pretty modest in comparison to some the (IMO) fanciful REO pricing forecasts contained in many recent RE project SS/FS/DFS's, based on Adamas Intelligence figures.
• For the sake of benchmarking the UG mining potential, and even based on currently low (some would say intentionally suppressed by PRC) REO basket pricing, the in-situ value of the Wolverine ore is estimated to be US$537/t, and after accounting for recoveries and 40% payability is US$170/t, or the equivalent of in-situ gold grades of 8.7g/t,...not quite bonanza grades but way, way above your typical UG gold mining operation.
• Operating costs of A$5/t of material moved for the open pit mining and A$133/t for underground material, A$35/t ore processed through the beneficiation circuit and the initial CAPEX of A$500, give us a forecast LOM ASIC of A$38.70/kg TREO (US$27.10) v. the US$75kg LOM pricing assumption, a gross margin of approx 64%
• Forecast NPV(7) of A$500m v. initial CAPEX of A$500m may be a little skinny for some financiers, so the DFS will have to be particularly robust if this thing is to be commercially financed...unless the OZGOV ponies up with a generous NAIF loan as per ILU's Eneabba refinery project.
• The issue of trucking the 25% xenotime concentrate all the way (approx. 2,500ks) to Eneabba has been a concern for some, including myself, but doing some simple math using the above assumption give us US$75/kg REO basket price x 25% conc. x 40% payability = US$7.50/kg / US$7,500/t concentrate value at the mine gate, or $A10,000- A$13,000/t depending on A$-US$ assumed, so plenty of fat assuming trucking costs of A$.10c/ton/klm of conc. = $A250/t

Anyway, some food for thought for punters, but as always DYOR and GLTAH!