Hey mate,
Cheers for the tag. I don't have the time to give a full deep dive analysis but i'll respond based on what i've gleaned in 10 minutes.
The best proxy/comparison is probably other companies which are exploring on the eyre where this tenement is located as opposed to proven ionic clays. With that in mind, ITM is probably a good company for others to read against. They too discovered REO clays in kaolin and proceeded down the exact same pathway and promise. They identified 100mt-200mT at just one of they 6 prospects.
They found (like many others in Aus) that only a small portion of the REO in the clay was in fact ionic. This means that at a low pH (low cost) the recoveries are poor.
And that to get good recoveries, they dose with acid. (ph1 or lower) this is now high cost.
That is fundamentally why ionic deposits are generally cost effective and non ionic clays are not.
There are other factors which impact overall viability which is the thickness of the clay hits need to be as thick or thicker than they are deep and grade 500-1000ppm.
I again re-iterate that ITM had what i felt to look quite promising. Good grade, solid thickness 200mT+ resource on minimal drilling. Even though they got a small portion ionic 5-20% it still wasn't good enough to cut the mustard.
And yes they then later done HCL testing which shows good recoveries but as i mention high cost. What many others are misleading shareholders in the space are doing is printing recovery numbers based on HCL leaching which is generally not cost effective but they're optimising as well.
Why am i indicating this companies history and progress. Because it's a good comparison for others to value cobra's REO project. People can read my bearish posts on ITM despite the fact i actually hold the company. That should provide people here some transparency that if i see an issue i call it as i see even if i hold the stock. The only reason i held after the REO was because the graphite. Here are some older post of the REO's there which may be of use to understand what to expect and look for here.
Post #:
64317130 REO screening beneficiation
Post #:
63058489 REO leachin comparisons.
Post #:
64140169 acknowledging the company needing to pivot focus.
"Best chance of success now is hoping that the recoveries aren't uniform across the deposit and thus area's with a larger ionic component exist within the MRE.
Will see where this goes, but think ITM may now need to pivot focus on the graphite and have this bubble away in the background. Graphite projects seem to have a higher degree of work already done in regards to met work and some preliminary studies which already suggest economics viability.
Any further success with the REO tenement for me now is probably just a bonus.
disclosure haven't sold or bought anything in the last 3 weeks and will continue to hold based on the graphite."
So again, to re-iterate why is this a good proxy for value comparison.
They have similar grade,
similar thickness (or better),
proven a portion is ionic,
proven they can leach with acid and get really good recoveries (but this is high cost)
have a large exploration target
advanced in the met work variability
and based in the same country/state and geological setting.
And yet, that company (ITM) is worth 20-25m EV of which almost all of which (IMO) is being attributed to the graphite projects and not the ionic clays projects because it appears under all its current inputs the project would not be viable even when considering kaolin. That is either kaolin as b-product or the REO as a by-product.
In short, unless they get 40-50%+ recoveries using only pH4, then like around 35 others i have watchlisted, it's not economically viable.
If they get a small portion being ionic then there is still 35 others in a somewhat similar position.
A small amount of those are more advanced, and arguably will have better economics (albeit maybe still uneconomical themselves).
For context AR3, ABX, IXR, DEV, etc all have proven a decent portion is ionic and with solid recoveries. But none of these would be viable as a mine at current REO price. The aus plays are so thin compared to depth that their strip is trash. 1m thick 2m deep is twice as bad as 2m thick 2m's deep.
The reason why IXR's market cap is better than the other pure REO plays is because they're much further advanced, have better economics (low strip) but mainly because they are going downstream and their main value attribution right now is they have and own magnet recycling IP which means they are producing novel REO at a profit irrespective of REO price. Preliminary economics suggest this done at scale is profitable at any price. Post #:
68522374 explain those economics.
It's worth noting i'm only commenting on the REO project of cobra, and i have no idea what else they have and so they might be a good RvR based on everything i've said. Use my info and 2000 worth of posts across ionic clays to better understand for oneself about to prospectivity of the REO clay.
ADN i note is shareholder of cobra and so largely, probably has very little current value/mc built in and thus anything cobra is valued at would be as a bonus.
i do keep my eyes across 50 odd stocks claiming REO in clays so i'm generally onto most areas or what most companies are doing. Areas which have proven no ionic material present or low ionic material present has generally been a good guidance to what everyone else in that area will eventually find when they perform the $500 ionic leach test. It's generally why i'm only watching with earnest companies with thick REO in clay where the area has never been tested for ionic material - or has been tested and is favourable.
it appears that largely Australia's inherent lithology and weathering profiles are not as amenable to producing ionic bonded REO in clays which are thick at surface and low in deleterious leach elements such as Calcium. It appears areas in africa, and south america (brazil), and southern china whom seem to benefit from more tropical environments are having the most success in discovering these types of projects.
My 4year search for a viable IAC in Aus continues.
Hope you're well and best of luck here to everyone and all their other investments.
SF2TH
(20min delay)