Potential Project Economics

In the current low rare earth price environment it does not appear to make any sense to build a hydromet plant.

because by doing so we are duplicating a process which can already be preformed in China and in the process:-

driving up our capex by $48.7M un-necessarily  and

driving up our opex by $9.80 kg un-necessarily (the cost of reagents and consumables - used in the hydromet plant)

eliminate the hydromet plant and it appears to me NTU then has a robustly viable mining operation producing and selling a concentrate

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according to Jack Lifton and other reputable sources in relation to producing and selling a clean HREE concentrate
into China there is a very small discount to the prices that can be obtained for individual separated HREEs

http://investorintel.com/technology-metals-intel/a-mixed-con-is-a-mixed-blessing-in-rare-earths/

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in a higher rare earth price environment it made good sense to progress with a hydromet plant - but not any more

ROW end users want non-Chinese suppliers of HREE's but they don't want to pay a premium - instead they want non-Chinese suppliers of HREE at current Chinese prices - that's the reality

The point is current rare earth prices are the reality, and we have to deal with them

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Without the hydromet plant and the associated costs I believe NTU's numbers change dramatically:-

This from the 1 May 2015 Investor Presentation:-


Now eliminate the Hyromet plant and the capex. reduces to $280.7M (USD$219M @ 0.78 cent exchange rate)


Now eliminate the Hyromet plant and the operating costs reduce by $9.80 kg = $27.80 kg ($37.60 less $9.80)

Now some assumptions on what NTU could generate in revenue per kg -  based on what Jack Lifton and other well informed sources have indicated lets say NTU can achieve 90% of the market price

and you will recall that the metallurgy test work has revealed that recoveries are around 93%

From the TMR website Browns Range current basket price is presently USD $55.61:-

http://www.techmetalsresearch.com/metrics-indices/tmr-advanced-rare-earth-projects-index/

So USD $55.61 kg divided by 0.78 cent exchange rate = AUD $71.29 kg  X 93% recovery X 90% of full price = AUD$59.67 kg sale price

AUD$59.67 kg less AUD$27.80 kg operating costs = AUD$31.87 kg net return

3,200,000 kgs to be produced  X  $31.87 kg  =  AUD $101,984,000 in net operating revenue

= less than a 3 year pay back

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The above are my "back of the envelope" calculations and assumptions, but it does appear to me that NTU is capable of generating more net revenue per KG from concentrate - than other rare earth producers will ever be able to achieve from selling a KG of separated REO.

Best to all Northern Minerals shareholders and new investors