Energy Fuels takeover bid for BSE...implications for ATR

The takeover bid by Energy Fuels of Base Resources has some negative connotations for the proposed Donald J/V IMO.

BSE's Toliara HM project in Madagascar is a large, long life mineral sands development that has experienced some major delays at the hands of the Malagasy government, who have suspended development at the project pending a revision of the national mining code. The JORC resource estimate is 2,580mt @ 4.3%, with the monazite component 2% of the HM. This makes it a larger resource than Donald MIN5532; 1286mt @ 4.8% HM with monazite 1.8% and xenotime .6% of the HM, but not as large for the combined Donald RL2002 & MIN5532 resource of 3225mt. At the planned mining rates both are 30 year+, tier 1 HMS projects

Donald phase 1 timeline sees REEC production of 7.5 ktpa from mid 2026, which would go close to filling the EF's White Mesa current phase 1 RE monazite capacity of 8-10 ktpa, but it's nowhere near the 30ktpa planned for White Mesa phase 2 scheduled for early 2027. Donald phase 2 will double REEC production to 15ktpa, but is not scheduled to commence shipping until 2H/2030, so WM phase 2 would need to find another 22.5ktpa of monazite feed from 2027 and and then 15ktpa from 2030.

Toliara's timeline sees it producing an average of 17.5ktpa of moncon from ramp up in 2028 and then 26.1ktpa for the decade from 2032, dropping back to 20.4ktpa from 2042 to ramp down in the 2060's.

If EF were to invest into both projects, and they were to follow their current (highly unlikely!) development and production schedules, EF can expect to see delivery of 7.5ktpa of Donald REEC commencing mid 2026, then another 17.5ktpa Toliara moncon from 2028, totaling 25ktpa, then another 7.5ktpa for Donald phase 2 in 2030, (total 32.5ktpa), then with Toliara phase 2 hitting it's straps in 2032, a total of 41ktpa of moncon/REEC, or 11ktpa in excess of their planned RE feedstock requirements of 30ktpa.

So if Energy Fuels is investing in mineral sands developers simply to secure a supply of monazite feedstock for their RE separation facility at White Mesa, in the long run they don't need both Toliara and Donald. Toliara's 26+ktpa from 2032 with some 3rd party offtakes to fill the gaps would suffice.

Donald does however have advantages over Toliara;

• Donald is closer to production with a mining licence and environmental approvals in place with the Work Plan the last major requirement ...Toliara development is currently suspended by the Malagasy government, I'm not sure what regulatory hurdles remain.
• Australia ranks 14 out of 180 nations in the Global Corruption Index; Madagascar ranks 148, hence perceptions of sovereign risk are far better...although after the Victorian government's rejection of the Fingerboards HMS project after meeting all the regulatory hurdles might contradict this...
• Donald being located in a US allied nation and therefore more likely to qualify for US Inflation Reduction Act funding.
• Donald's phase 1 CAPEX is A$400m v Toliana phase 1 CAPEX of US$591m.
• Donald's REEC being 75% monazite and 25% xenotime has higher proportion of HREE's Dy & Tb which will provide a better mix of magnet RE's, much like ILU's offtake agreement with NTU of Browns Range xenotime concentrate to 'sweeten the blend' from the Eneabba RE refinery.

I think if we see further slippage in the J/V negotiations the likelihood of a positive conclusion for ATR becomes remote...only a week to go until we find out...DYOR & GLTAH!