ggg potential vs lynas, page-18

Hi tretchikoff,

I bought back into lynas a week ago, and I have held them previously - so I am not biased in my opinions. Lynas is an attractive option, has an (almost) operating plant and the P/E will be good once the ramp up is complete. Risks remain though - not least of which is the process, which is yet to be proven outside the pilot plant .... and of course smsl.

I wouldnt be so quick to dismiss ggg however. Take a close look and you will find:
-Mining is from the surface - as cheap as you can get.
-The ggg grade is considerably lower than lynas, but it is cheaply upgraded to 12% with benificiation.
-GGG has uranium as a byproduct, and at 2.7mlb per annum it is no small producer. Lynas has no significant by products and that is part of the reason why the lynas cash cost will be $21/kg in fy13, reducing to $16kg at full production in fy15 (macquarie private wealth)
-GGG will be producing 52,000tpa of REEs compared the 22,000 from lynas. Scale is important to low cash costs.
-GGG has far more of the heavy REEs compared to lynas and that is where the value is.
-Take a look at the GGG flow sheet compared to lynas. No high temperature cracking, just standard milling, floatation and leaching. I should add here that the the ggg pfs produces a mixed reo product and I understand the $3 cash cost is for the mixed reo product - so it isn't necessarily a like for like comparison with lynas cash cost. However they have conservatively discounted their sales basket price in their financial model to account for this. They are currently evaluating whether to sell the mixed product or do the final separation themselves.
-The ggg REE and uranium resource size is huge, and set to be many times bigger yet

I dont say these things to discredit lynas - it is still cheap at present. But at a market cap of $180m, i feel GGG is set for a big run if the ban is removed and a joint venture partner buys in. I haven't looked at PEK or ALK for a while, but I don't remember them being overly cheap at the time. Worth another look now though given the recent weakness in REE stocks.

Cheers, Steve