Hi sf2th. Appreciate the detailed post as always.
I think in regards to your case 1 vs case 2, quite simply as you would know hard rock cannot produce a 100% concentrate, and given the direction and flowsheet that Pensana want to use (all about low cost as opposed to additional cost and additional benefit), 100% isn't even close to what is realistically possible.
Whether the opex for 35% is $1.32 or hypothetical 100% is $3.77 and the sale price is $2.2/kg or $6.6/kg (yes noting I used $6.28 as opposed to $6.60 previously - makes minor difference to the discussion). Ultimately assuming the linear pricing relationship which I have been going with, quite simply case 2 isn't possible as you would know. You mention case 2 being 3x more profitable. In terms of an absolute value then yes of course, based on linear pricing, in terms of % of course its the same % profit margin? So I guess the answer to why wouldn't PM8 go down that road (Assuming linear pricing) is that it's not possible at linear opex costs (which you touched on -
but I never claimed this in a non hypothetical sense). Opex costs (and capex) would of course rise if Pensana wanted to introduce additional measures to get the concentrate grade anywhere even close to 100%. Thus why I stated my post was
purely hypothetical. In my view, even though I was proving a 'purely hypothetical' view, it still added value, thats why I posted it.
So I guess this may be where you are coming from in terms of your view that linear pricing and costing is not accurate. I think it's fairly obvious that the law of diminishing returns will kick in at some point as you have touched on. Thus why I stated it was purely hypothetical. Because realistically linear opex pricing will not occur.To be honest I think you've taken my intent of providing the 100% concentrate grade figure down the wrong path (whether on purpose or not) but that may be how I've initially framed it. I'm not EVER trying to say "here are the costs of Longonjo 100% concentrate that Pensana COULD produce at if they wanted", because thats not accurate, I'm saying "here are the costs of Longonjo 100% concentrate on a purely hypothetical basis based on current costs". There are no non producing hard rock rare earth players with opex costs this low.
The point of the 100% figure is to basically be able to compare on an apples to apples, per percent concentrate basis, of hard rock costs vs clay, because as you would have seen and touched on, I made mention in my post the whole 'ionic clay is cheaper' mindset.
I have re-read my post in this thread, and do feel free to point out any previous posts on Hotcopper where I have ever stated that the hard rock margins are better than clay margins. No problem with you trying to prove your point about better margins except for the fact that I'm not sure of the actual reasoning behind it (as I don't believe I claimed anything to do with hard rock margins being greater than ionic clay margins in the past).
In regards to pricing I am leaning more towards you being correct about the logarithmic scale. Again I am not sure why you have chosen to bring that to the discussion here on PM8 forum in this particular instance as we discussed and agreed to disagree essentially on the OVL forum. The reason I'm not fully onboard with your reasoning is I'm waiting for OVL to provide their numbers (which probably will mean waiting until the Scoping Study), as I believe concentrate pricing is currently opaque and I would like additional evidence to that provided for Biolantanidos to then allow me to agree with your view regarding concentrate pricing.
Chinasyndrome is probably referring to the issues of in situ leaching as per this paper (page 134) . Yes I am aware of where this paper is being hosted (texas minerals website), however I believe it to be accurate) http://tmrcorp.com/_resources/pdf/China_Ionic_Clay_Pollution.pdf
In summary for those skimming the thread:- My extrapolation of Longonjo opex at a 100% grade is purely hypothetical as originally stated, no i do not believe opex costs go up linearly and I don't believe anyone here actually believes that. I don't believe I have ever stated this in a NON hypothetical sense).
- I don't believe I have ever stated that hard rock margins are better than clay, if I have in the past please do evidence it because it is not accurate. I am purely referring to opex costs as mentioned in my purely hypothetical post in this thread
- You may very well be right in regards to concentrate pricing however I am awaiting further evidence from OVL.
- I don't post on OVL anymore because hotcopper posters are allergic to evidence based discussions, which I tried to bring. Appreciate you for bringing an evidence based discussion (your evidence is why Im leaning more towards agreeing on the log concentrate pricing scale).
- Personally not yet sold on the environmental impacts of ISL being minimal, therefore not invested in OVL. I would say that those invested in PM8 not only care about low capex, low opex, government support, but also about the environmental impacts of this project which are minimal. Otherwise those chasing higher margins could be swayed to invest in OVL. Of course there are also a multitude of other factors such as project ownership %, stage of project, location etc. Essentially thats a very long winded way of saying the obvious - "there are pros and cons to every project".
- With OVL likely having twice the recoveries of heavy REE compared to its LREE, it seems the project may have a lot of future potential, however OVL is at a very early stage and thus discussion at times of OVL provided numbers is lacking at this pre scoping study stage.
Thanks for posting. Note: I have underlined parts of my post to clear up the intent of my original post.
