SP seems in freefall, page-9

HAS in the same pickle they been in for a long time imo, exacerbated by that poor decision to borrow $150M on a 3 year con-note to buy NEO, ameliorated to some extent by a brilliant pump and dump $100M CR snafu at the same time. Due to relentless capex and opex increases (driven by inflation and need for more honesty under external reviews by the likes of NAIF) the current NdPr prices don't make Yangi economic to fund and run...

As a reminder, VML just suspended their Sakatoon plant for processing Tardiff ore because the plant wasn;t economic (not helped by lack of economies of scale) but mostly because they couldn;t get an off-take at prices that made bank (from this weeks VML relesae)


ARU's recent German off-take price is linked to ex-China quoted RE prices, though it may have a period of sweetheart premium but wasn;t mentioned). Any developer's first requirement is to demonstrate to lenders and equity market the project is robustly profitable enough to payback debt and not have equity writen off to zero in administration if prices fall over the critical first 5 years plus. Neodymium price (proportional to Pr) has been falling from Feb'22, same time as the market saw through the DFS deception and lenders failed to materialise from the global tin-rattling road show...


The FEB'22 DFS was a litany of errors and under-cooked costs to make Yangi look a lot higher margin than it is. Reality is slowly being confessed in the last MRE update and shortly to be released next DFS update iteration. Project margins, the requirements for private debt and equity funding (still both very substantial despite increased NAIF and Export Finance Australia loan assistance), are tight to non-existent pinched between higher capex/opex and lower prices. It's well and good to point to future REO price increases with hope, but hope isn't a incentive for lenders and first loss equity investors to tip into a marginal to loss making proposition me thinks.

Resource Minister King had the right of it when she said Australia can't support some of these marginal projects alone. If the world really wants the product, it's going to have to accept the risk of long term fixed-price offtake contracts that make marginal deposits profitably robust. ie transfer some of the risk from lenders/equity investors to off-takers...

GLTAH