Hi Chihawk, I'm afraid we'll have to disagree on this one.I can...

Hi Chihawk, I'm afraid we'll have to disagree on this one.

I can only base my opinion on the information I have found:

LYC March presentation page 14 shows 2014 Ce Demand 52800t V Supply 66300t.

US DoE Critical Metals Strategy -
page 82 figure 7.7 shows 2015 Demand around 60000t V Supply 80000t.

Both studies are only using Moly S1 production.

The ramp in pricing for Ce & La is clearly not being driven by a matching growth in underlying demand and the DoE CMS provides the explaination on page 32: "In July 2010 China imposed the tightest quotas thus far, leading to a 40% drop of exports. This latest set of export quotas were non element specific and applied to all exports of REEs, which in turn led to price spikes for the lower valued light rare earth elements (LREEs) as traders favoured exports of the more valuable HREEs."

I cannot believe that a commodity with a long term average of under $4 is going to maintain a price of $130 if the numbers above are accurate. At the peak Rest of World (excluding China) demand of 50kt (total REEs) in 2008 Ce was selling at $4.56kg. As Ce makes up around 45% of RE production by weight this would impact negatively on the total basket price but I guess we'll just have to wait and see.

In contrast, both studies demonstrate either tight supply or shortages of Ne, Pr and most HREEs + Yt so I totally agree with your focus on HREE elsewhere. (Although have to admit I've taken a profit there as well).

Irrespective of the above Mt Weld will be very profitable in the short, medium & longer term with costs around $13/14kg.

Of course LYC can increase it's basket price/profitability if it can add more HREEs into the mix from Crown & Duncan. LYC 07 Annual states: "The Mt Weld Rare Metals deposits (Crown) also contain significant grades of Rare Earths strongly enriched with the valuable heavy lanthanides, which could ultimately contribute considerable value." Unless these have evaporated in the past three years Crown is core LYC RE and should be retained.